Bell Canada-owner BCE Inc. was dealt another regulatory blow this week as it reported a loss in its latest quarter and recorded $2.11 billion in asset impairment charges, mainly related to Bell Media's TV and radio properties.
Shares in BCE closed down $1.12, or 2.8 per cent, at $38.94 on Thursday — the first time since 2012 that the company's shares closed below $40.
Earlier in the day, BCE reported its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30.
That compared with a profit of $640 million or 70 cents per share a year earlier. On an adjusted basis, BCE earned 75 cents per share compared with an adjusted profit of 81 cents per share in the same quarter last year.
The company shared its latest quarterly results a day after it was denied an appeal of a partial CRTC decision last year that allows smaller internet providers to sell services to their customers through Bell’s fibre network in Ontario and Quebec.
While that temporary decision has since been expanded across Canada, Bell had asked the federal cabinet to review the regulator’s preliminary move. It has argued the CRTC's direction, while meant to stimulate competition for internet services, reduces its incentive to continue building out its fibre network.
Industry Minister François-Philippe Champagne said in a statement Wednesday evening that Bell's petition to "rescind or vary" the decision was declined.
"Workable wholesale access to fibre networks is needed. The CRTC has moved quickly to improve competition through this decision and others coming out of its broad review of internet competition," Champagne said in a statement.
"The government commends the CRTC on quickly launching a review of the wholesale regime last year and welcomes the CRTC's significant decision to open up wholesale access to high-speed fibre networks."
A separate appeal of that decision by Bell, filed with the Federal Court of Appeal, was withdrawn by the company after the CRTC announced in August that its decision would apply to networks nationwide starting next February.
BCE chief executive Mirko Bibic said Thursday that Bell is a "fibre-first company," with the technology "at the heart of what we do."
He said Bell is continuing to work toward its fibre-build target of reaching 8.3 million locations by the end of next year, calling it an area of growth for the company.
That's despite BCE reducing capital expenses by more than $1 billion over 2024 and 2025, including a year-to-date reduction of more than $600 million.
Earlier in the week, the company announced it signed a deal to buy U.S. fibre internet provider Ziply Fiber for about $5 billion in cash, using about $4.2 billion in net proceeds from the sale of its stake in Maple Leaf Sports & Entertainment to help pay for the deal.
"You've got to align your cost structure in those segments that are declining, to align the cost of the revenues," said Bibic.
"If some assets are going to perpetually decline, we might shed those lines of business, like some of the radio stations. We're being pretty diligent in managing the declining segments ... and we're continuing to invest aggressively in the growth areas."
The company said Thursday its operating revenues for the third quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023. BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The change comes as BCE faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company's second-best performance on the metric since 2010.
It said the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competition and promotional offers. BCE's monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
"I'm not happy with where churn is. I don't think anyone would be given the numbers," said Bibic, adding the company is coping with "what's arguably been the most competitively intense market we've seen."
"It is a marketplace reality that consumers are continuing to shop for deals given the sustained, aggressive promotional offers that are in the marketplace. So because of that, you're going to see a lot of switching activity."
BCE also saw 11.6 per cent fewer gross subscriber activations. Bell's wireless mobile phone average revenue per user (ARPU) was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
But Bibic said the company has been "very diligent in the customers we're bringing in," encouraging customers to sign up for its premium Bell brand over discount alternatives it owns such as Virgin Mobile.
He said BCE is "not chasing every single load at all costs because that's not a winning formula."
Chief financial officer Curtis Millen added that the company "intentionally slowed down subscriber acquisition ... to not lock in customers on low ARPU contracts."
Scotiabank analyst Maher Yaghi said BCE's churn levels increased "significantly more than anticipated" — something it will need to address quickly "to stabilize financial performance from further deterioration."
"We are squarely focused on what 2025 will bring given the company’s weaker performance operationally in wireless as we head into a usually busy and competitive holiday period," Yaghi said in a note.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:BCE)
Sammy Hudes, The Canadian Press
