Open this photo in gallery:
BEC Inc.’s legacy businesses continue to decline, with both video customers and advertising revenue down last quarter.Paul Chiasson/The Canadian Press
Telecom and media company BCE Inc. BCE-T posted flat revenue and fewer mobile customers compared to last year, as it focuses on its growing artificial intelligence division and paying down debt.
The company reported third-quarter revenue of $6-billion, up 1.3 per cent from last year and in line with analyst consensus.
In the quarter, the company added 11,500 new postpaid mobile customers, down 65 per cent from last year, and 56,500 prepaid mobile customers, down 18 per cent. Analysts had expected 28,000 net postpaid and 55,000 net prepaid adds.
The company’s AI-powered solutions and enterprise business, which includes its data centres, cybersecurity and technology consulting business, had revenue growth 34 per cent.
BCE chief executive officer Mirko Bibic said he was encouraged by measures in the Liberal Party’s budget, released Tuesday, which underline the importance of sovereign AI.
“I think the support there is very important, and because it shows desire to accelerate and encourage the adoption of AI.”
Over all, he said the budget contained “a number of pro-investment initiatives that I think should be looked upon quite favourably, because we do need to grow our economy and improve our competitiveness in our productivity.”
These measures included tax changes which would allow companies to write down capital expenditures more quickly.
He said those measures could affect BCE investment decisions, given that the company spends billions in capital expenditures each year.
Net new internet additions were 26,100, down from 42,000 last year, reflecting aggressive promotional offers by competitors offering cable, wholesale fibre, fixed wireless and satellite internet services.
But the company added 65,000 new fibre internet subscribers, as opposed to customers on the company’s copper lines, Mr. Bibic said, with many of those new fibre additions in the U.S. through its newly acquired Ziply Fiber.
“The market is growing, but it is growing at a slower rate across the board,” Mr. Bibic said Thursday morning.
The company’s legacy businesses continue to decline. Bell lost 16,100 video customers during the quarter, and saw its advertising revenue decline 11.5 per cent.
Average revenue per user – a metric used in the industry to measure a company’s earnings per customer – was down 0.4 per cent compared to last year, due to “ongoing but abating competitive pricing pressures in the quarter on rate plans and greater discounting,” the company said.
Several analysts said in notes leading up to the company’s earnings release that they believe the Canadian telecom sector is moving beyond the trough – the lowest point in the economic cycle – in terms of subscription pricing and stock valuations. However, the sector continues to face ongoing headwinds, including lower immigration, a mature market and continued macroeconomic uncertainty.
Selling BCE for the tax loss? Read this first
During the company’s investor day in October, BCE executives provided three-year guidance, including a compound annual revenue growth rate of between 2 and 4 per cent. In a note to investors following that event, Royal Bank of Canada analyst Drew McReynolds said that outlook “implies a relatively attractive growth algorithm,” and called it “achievable” as the company seeks more cost savings and new growth opportunities.
On investor day, Bell executives told The Globe and Mail they are not currently planning to increase the company’s dividend for the next three years while they focus on expanding areas including artificial intelligence, digital media and the company’s U.S. fibre business.
The company has set a revenue target for its artificial-intelligence services target of $1.5-billion by 2028. Analysts estimate the company will earn about $27-billion in total during that year.
Last week, the company announced that former banking executive Gordon Nixon will leave his long-time role as BCE chairman in May. BCE says it plans to nominate current board member Louis Vachon to replace him, contingent on his re-election as director.
