Bell in position to grow its share of wireless market with network performance: CEO
All three national carriers – Bell, Telus and Rogers – recently adopted their first-ever unlimited mobile data plans
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TORONTO – Canada’s wireless industry will have more difficulty growing revenue as overage fees are eliminated from monthly data plans, but Bell Canada will be very competitive and could win market share in that environment, according to BCE chief executive George Cope.
Wireless plans with unlimited amount of data at a fixed price will increasingly focus on network performance “and on that front, we come out way ahead of the competitor who led this change,” Cope told analysts Thursday in a conference call.
Cope didn’t identify the competitor but said “we’re in excellent position to continue to move market share.”
Bell appears to have won more competitors in the second quarter than its biggest rival Rogers – the first of Canada’s national carriers to offer mobile plans without data overage fees, a strategy used by their regional rival Freedom Mobile.
Bell may also have done better than Telus, which reports its second quarter results on Friday. Analysts have estimated Telus added fewer wireless subscribers than the 149,478 additions that Bell reported on Thursday.
“Against that backdrop, we wonder whether we may be entering a phase of relative out-performance by BCE,” Canaccord Genuity analyst Aravinda Galappatthige wrote in a note to clients Thursday.
“With Freedom expanding its gains in Ontario and likely to make more gains in the West with more aggressive back to school plans, one can argue that Bell has a little less exposure here vs peers.”
All three national carriers recently adopted their first-ever unlimited mobile data plans, a pricing strategy that Freedom Mobile has used effectively for more than a year in Ontario, Alberta and British Columbia.
The new pricing strategy does away with extra fees if a subscriber goes over the month’s data allotment. Instead, wireless transfer speeds may be slowed for the remainder of a month if usage rises above a predetermined limit.
Cope said Bell continues to expect its wireless ARPU growth will be within BCE’s guidance range for 2019, despite the adoption of data plans without overage fees.
“I think it’s fair to say that, structurally, the change does ultimately moderate ARPU growth in the industry,” Cope said.
Bell has also recently joined Telus and Rogers in offering their first zero-interest financing plans for wireless devices, as an alternative to their practice of subsidizing the cost of new hardware as part of a one or two-year service contract.
Besides operating one of Canada largest wireless businesses under the Bell, Virgin and Lucky brands, BCE owns Canada’s largest television and radio business, one of the country’s biggest residential internet services and a minority share of the company that owns Toronto’s major league basketball, hockey, soccer and football teams.
BCE’s second-quarter results showed strength across the board and beat analyst estimates by several measures.
Its operating revenue was up 2.5 per cent to $5.93 billion from $5.8 billion in the year-ago period.
Net income attributable to shareholders was $761 million, or 85 cents per share, up from $704 million in the same quarter of 2018. Adjusted earnings were up nine per cent to $847 million, or 94 cents per share.
Analysts had expected adjusted earnings of 90 cents per share and $5.9 billion in revenue during the quarter, according to financial markets data firm Refinitiv.
In its wireless segment, BCE added 102,980 postpaid and 46,498 prepaid wireless subscribers in the quarter, besting analysts’ expectations in both segments. Growth in the prepaid market segment was led by Bell’s relatively new Lucky Mobile brand, which has a national distribution agreement with Dollarama.
Bell’s media segment – which owns the CTV television network, TSN and other specialty TV channels and the country’s largest collection of radio stations – also performed well. Revenue was up 6.4 per cent, as a record 7.9 million viewers tuned to Bell stations to watch the NBA team win its first-ever championship.