BCE Sees Major Earnings Boost in Q2 2024, Despite Revenue Dip
Bell (TSX: BCE) has reported an increase in its earnings for the second quarter of 2024, posting $537 million, or 59 cents per share in net earnings, compared to $329 million, or 37 cents per share, in the same period last year. This growth represents a 63.2% increase in net earnings attributable to common shareholders and a 59.5% rise in earnings per share.
The company’s total operating revenue for the quarter slightly declined to $6.01 billion from $6.07 billion in Q2 2023, reflecting a 1.0% decrease. BCE managed to maintain stability in its service revenue, which saw a marginal increase of 0.1% to $5.31 billion.
“Adjusted EBITDA grew 2.0%, with a 3.3% reduction in operating costs this quarter, demonstrating our disciplined focus on driving costs out of the business,” CFO Curtis Millen stated. The company’s adjusted earnings for the quarter were $712 million, or 78 cents per share, slightly down from $722 million, or 79 cents per share, in the previous year.
The rise in profitability was largely driven by lower other expenses, including reduced buying obligations, severance, and acquisition costs.
BCE’s strategic investments played a crucial role in its financial performance. The company made several key acquisitions and expansions during the quarter. Notably, BCE acquired Stratejm and CloudKettle, expanded its collaboration with ServiceNow, and announced the sale of Northwestel to a consortium of Indigenous communities from the Yukon, Northwest Territories, and Nunavut.
“Bell’s Q2 results reflect the Bell team’s disciplined execution and continued ability to navigate an evolving marketplace,” CEO Mirko Bibic said. “We’re also making strides in our transformation from a telco to a tech services and digital media leader.”
BCE’s fibre network expansion contributed significantly to its strong performance in the quarter. The company reported its highest Q2 consumer retail Internet net additions in 17 years and an 18% year-over-year increase in households subscribing to bundled Internet and mobility services.
In the highly competitive wireless market, BCE maintained a balanced approach between subscriber growth and profitability. Total postpaid and prepaid mobile phone net additions were up 4.4% in Q2 to 131,043. The company also saw a 10.5% increase in mobile connected device net activations, driven by strong demand for Bell IoT services.
Bell Media also contributed to BCE’s positive financial results. The media segment’s operating revenue increased by 0.9% to $812 million in Q2 2024, driven by a 1.9% rise in advertising revenue. This growth was supported by stronger year-over-year TV sports specialty performance, higher digital advertising revenue, and the financial contribution from the acquisition of OUTEDGE Media Canada.
Digital advertising revenue saw a substantial increase of 23%, fueled by Bell Media’s programmatic advertising marketplace and the growth in direct-to-consumer streaming subscribers for Crave and sports content. The Formula 1 Canadian Grand Prix and higher international sales of Bell Media content also contributed to the revenue boost.
Despite the positive financial results, BCE faces ongoing challenges in the competitive telecom market. The company’s product revenue decreased by 8.7% to $697 million, reflecting reduced consumer electronics sales from The Source, lower mobile device sales, and decreased telecom data equipment sales to large business customers.
Additionally, BCE’s capital expenditures were down 25.2% to $978 million, consistent with a planned reduction in capital spending and a slowdown in the pure fibre build. The company also experienced a 9.6% decrease in cash flows from operating activities, mainly due to higher interest payments, severance costs, and lower cash from working capital.
Looking ahead, BCE confirmed its financial guidance targets for 2024. Key financial guidance targets for 2024 include revenue growth of 0% to 4%, adjusted EBITDA growth of 1.5% to 4.5%, and capital intensity below 16.5%.
This follows after Bell Media announced plans for further layoffs as part of its restructuring efforts, confirming the elimination of 43 technician positions with departures between August 30 and September 27. Unifor, the union representing over 10,000 media workers in Canada, expressed outrage, noting that up to 49 unionized positions, including electronic news gathering editors, media services coordinators, graphic artists, and audio-visual technicians, could be affected.
Bell last traded at $46.57 on the TSX.
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