MONTREAL — BCE Inc. boosted its profits despite a dip in revenue last quarter as the telecom giant began to feel the financial effect of thousands of job cuts from earlier this year.
Earnings attributable to shareholders jumped 63 per cent year-over-year to $537 million in the company's second quarter.
The higher profits stemmed from lower expenses, including lighter buying obligations and severance and acquisition costs, the company said.
Revenues in the quarter ended June 30 slipped one per cent from the same period a year earlier to $6.01 billion. Chief executive Mirko Bibic attributed the decrease to cheap offers at rival mobile and internet providers that drove down prices and lured away customers as well as the closure of 107 outlets of The Source — 39 per cent of the electronics retailer's locations.
“On wireless and on pricing, we are facing the most intense competitive pressure in the history of our industry in Canada,” he told analysts on a conference call Thursday.
"While consolidated top-line growth continued to be impacted by sustained competitive pricing pressures and expected revenue loss from The Source, we remain laser-focused on profitable margin-accretive subscriber growth and driving costs out of the organization."
In February, BCE announced that 4,800 jobs "at all levels of the company" would be cut in a staff reduction of about nine per cent. The layoffs came as part of a restructuring that axed multiple television newscasts, including at CTV and BNN Bloomberg.
The company also sold 45 Bell Media-owned regional radio stations across the country.
The move drew widespread backlash, including from Prime Minister Justin Trudeau, who specifically called the 440 scrapped media positions at the company a "garbage decision." Frustration over the cuts spilled over at the company's annual general meeting in May, as investors and employees questioned executives on their compensation during a period of belt-tightening for staff.
However, the decision seemed to bear financial fruit.
Analyst Jerome Dubreuil of Desjardins called BCE's financial results "slightly positive," as better margins offset lower revenues.
"BCE’s restructuring plan is becoming more apparent," he said in a note to investors.
"We believe telecom value creation will have to come from tight cost control in the future given the challenged top line, and we are encouraged by BCE’s progress in this regard."
BCE added 78,500 net postpaid mobile subscribers in the quarter, down about 30 per cent compared with the year before.
The company said its monthly churn rate — a key metric measuring subscribers who cancelled their service — hit 1.18 per cent, up from 0.94 per cent a year earlier.
The higher customer turnover among net postpaid mobile subscribers came as the company dealt with "greater competitive market activity" and a flurry of wireless deals from rivals, he said.
"The churn does remain elevated and it's clearly not at a level that I'm satisfied with, but it's down sequentially from Q1," the CEO said.
Average revenue per wireless phone user fell 1.9 per cent year-over-year to $58.04 in the second quarter.
The company added nearly 24,000 net new retail internet subscribers, it's second-best result for the second quarter since 2007.
"Notably, 41 per cent of our new internet customers this quarter subscribed to a service bundle with wireless, which should help ... improve retention," Bibic said.
He also stressed Bell Media's ongoing transition from a traditional broadcaster to a "digital media and content leader."
Last quarter, the subsidiary generated a 35 per cent year-over-year increase in digital advertising revenue, including via streaming service Crave, which launched ad-infused subscriptions last summer and through a new TikTok advertising partnership.
Overall, adjusted earnings slipped to 78 cents per share from 79 cents per share last year, in line with analysts' expectations, according to financial markets firm LSEG Data & Analytics.
The company affirmed its financial forecast for the year, but warned it plans a “significant reduction” in capital expenditures on its fibre-optic broadband network and on highly-regulated businesses as a direct result of federal policies.
This report by The Canadian Press was first published Aug. 1, 2024.
Companies in this story: (TSX:BCE)
Christopher Reynolds, The Canadian Press
