Bell Canada Reports Solid Q1

Revenue was CDN$4.70B, up 0.4% from 1Q03, and EBITDA was of CDN$1.85B, an increase of 4.1%; earnings per share were $0.51

May 5, 2004

5 Min Read

MONTREAL -- (All figures are in Cdn$, unless otherwise indicated) For the first quarter of 2004, BCE Inc. (TSX, NYSE: BCE - News News) reported revenue of $4.70 billion, up 0.4% and EBITDA(1) of $1.85 billion, up 4.1% when compared to the same period last year. Operating income increased by 3.8% to reach $1.0 billion and earnings per share were $0.51, an increase of $0.01. Not including the foreign exchange gain recorded in the first quarter, 2003, EPS increased by $0.04 or 8.5%. During the first quarter, BCE generated free cash flow(2) of $234 million, up 11%.

"We are pleased with the solid progress the company has made in the first quarter," said Michael Sabia, President and CEO of Bell Canada Enterprises. "We had an outstanding performance in our Wireless business with strong revenue and subscriber growth in both our Business and Consumer groups. Our DSL and video gains were also solid and we're beginning to see positive signs of improvement from the initiatives we have taken to bolster the performance of our Small and Medium Business (SMB) and Enterprise groups." Wireless

Our Wireless business reported 92,000 new customers, a 31% increase in the net activations compared to the same period last year. It successfully lowered its post-paid churn to 1.1%, an improvement of 0.2 percentage points, through customer care initiatives and sustained marketing efforts. As a result, the total wireless subscriber base increased 13.5% compared to the first quarter, 2003, driving an increase of 18% in wireless revenues. Increases in usage, wireless long distance and data services also contributed to the revenue growth.


Bell increased its Sympatico DSL High-Speed Internet subscriber base by 32% compared to the first quarter, 2003 to reach 1.6 million subscribers. This drove higher Internet revenues of 18%. Net DSL additions of 115,000 in this quarter represent the strongest quarterly increase since 2001. The subscriptions to value-added services, such as Desktop Anti-Virus and Desktop Firewall, were up by more than 200%.

A Focus on Profitability

With a sustained focus on productivity measures, which included more profitable contracts in our Enterprise and Wholesale groups, EBITDA grew by 4.1%. EBITDA margin improved 1.4 percentage points over the same period last year to 39.3 %. This on-going financial discipline across our businesses yielded an 11% free cash flow increase and a $430 million net debt reduction.

"These are critically important accomplishments as we continue our drive for profitable growth," Mr. Sabia said. "A continued steady focus on the fundamentals - innovation, simplicity, efficiency and financial discipline - is our key to success in an IP world."

Continued Strong Performance in Consumer Segment

Bell's consumer segment revenues increased to $1.8 billion, a jump of 5.6% over the same period last year, due to growth in Wireless, DSL and Video. Video subscribers increased by 16,000 and revenues were up 17%. Bell doubled the speed of its high-speed service for 75% of its customers to three megabits per second - at no cost to them. And the company extended the availability of its high-speed service to 80% of customers in Quebec and Ontario and to 66% of Atlantic Canadians.

Bell will soon launch a new generation Sympatico portal with Microsoft. The new portal will focus on simplicity and add value for customers by offering enhanced home page customization, advanced messaging, superior security and exclusive portal content. The portal, combined with Bell's new Wireless Home Networking service, will give Bell customers access to unique content anywhere, anytime.

"High speed Internet is our conduit into the broadband home and the pipeline our customers will use to access the world of Internet Protocol services," said Mr. Sabia. "For those two reasons it's critical for Bell to lead in this area. We are using our Sympatico portal to draw in even more high- speed subscribers by turning it into a one-stop shop for all their on-line needs."

Customers enjoying the benefits of the Bundle from Bell reached 130,000. Over 40% of the nearly 70,000 new customers in the first quarter have signed up for at least one new service.

Improved Results in Business Segment

Business segment revenues grew 1.1% to reach $1.4 billion. This was largely due to higher wireless revenues, IP services revenues, terminal equipment sales and teleconferencing growth. Partially offsetting these increases were lower data and long distance revenues. Data revenues were also affected by the anticipated decrease in revenues from Bell West's SuperNet contract in Alberta, which is in its last year. Overall, however, there was strengthening in the Business segment results compared to previous quarters.

Changes in Bell's SMB group are simplifying operations and shortening turnaround times. For example, we have shortened provisioning times for business high-speed Internet service and the installation of Private Branch Exchange (PBX) telephone systems. This means the customer is up and running far sooner than before. For us, it means an earlier start to the revenue flow.

Bell's large Enterprise customer group is leading the charge in the company's transformation to an IP-based communications company. IP based revenues grew by 35% in the quarter and 30% of data revenues are now on the IP platform.

"The early adoption of our IP solutions by our major business customers is central to the successful migration of all our customers onto our IP platform," said Mr. Sabia. "IP migration plans for most of the customers in the Enterprise group are being developed to ensure this momentum continues."

BCE Inc.

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