Bell Canada parent comes up short of forecasts

Thu Feb 9, 2012 2:41pm EST
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By Alastair Sharp

(Reuters) - BCE Inc (BCE.TO: Quote), parent of Bell Canada, provided an uninspiring 2012 outlook on Thursday while reporting quarterly profit and wireless subscriber numbers that fell short of forecasts, sending its shares down more than 2 percent.

The disappointing fourth-quarter results in part reflected intense pricing competition during the holiday sales season, forcing BCE to pay heavily to lure and retain valuable smartphone customers.

While adjusted profit rose 8.5 percent, analysts were expected faster growth. A target range provided by the Montreal-based company opened up the possibility that BCE could show no growth in 2012 by one important earnings measure.

On new wireless subscribers, the company fared even worse, with about 132,000 contract, or "postpaid" customers, or about 4,000 fewer than expected, even with the October launch of Apple's iPhone 4S likely flattering the number. A year earlier, it signed up nearly 157,000 of these valuable subscribers.

"Overall, the results show that competitive pressures in the market are accelerating," said Desjardins analyst Maher Yaghi in a note to clients.

Montreal-based BCE's rivals include a handful of established cable providers that bundle mobile with TV and Internet services, plus upstarts focused on low-cost wireless service.

Revenue from Bell's landline operations fell at a faster pace as customers disconnected home phones and Internet growth slowed to a crawl. Landline, which includes fixed-line telephone and Internet service, which still accounts for 59 percent of operating revenue.

"The real problem was wireline. ... The wireline trends were terrible," said Canaccord Genuity analyst Dvai Ghose, adding that Bell was not spending enough to push its Fibe Internet television service, or IPTV.   Continued...