The Bell Canada logo is seen in Montreal, Tuesday, June 21, 2016. BCE Inc. reported its earnings for the latest quarter. THE CANADIAN PRESS/Paul Chiasson
Following Rogers Communications Inc.’s successful closing of the largest telecommunications deal in Canadian history last month, the company’s two main rivals say they are well-positioned to compete in the altered industry landscape.
Bell Canada president and CEO Mirko Bibic said Thursday he’s encouraged by the state of competition in the sector following the $26-billion purchase by Rogers of Shaw Communications Inc.
Bibic said the deal’s approval, which hinged on the sale of Freedom Mobile to Quebecor Inc.’s Videotron, will create a strong fourth player in the Canadian market.
“That is very rare across the global footprint. Having four players like that is quite significant and will enhance competition and consumer value,” Bibic told analysts on Thursday as Bell’s parent company BCE Inc. reported its first-quarter financials.
“On the wireless side, specifically, we are one of the very few countries with four players and probably the only with the convergence between wireline and wireless. I think the job ought to be considered as having been done now on the wireless front from a public policy and regulatory perspective,” said Bibic, who also heads BCE.
He added Bell is closely watching regulatory developments in the sector that will impact the company’s investment decisions going forward.
Zainul Mawji, president of consumer solutions at Telus, said in an interview that the company remains focused on its own strategy.
“The competitors in the market are not new to us,” she said, noting Telus continues to “push the investment envelope” and emphasize its differentiated brands, including Telus Agriculture and Telus Health, to compete with other big players.
“We have over 20 years of consistency and delivery and so we’ll continue to focus on our customer experience, our social capitalism and the principles that are near and dear to us that resonate with our customers.”
Speaking to analysts as Telus also reported its first-quarter earnings, Mawji added Telus has proven it can withstand “competitive challenges.”
“We’ve also demonstrated the capability to weather different kinds of rugged, regulatory changes, to weather macroeconomic changes, to be ahead of our peer group in circumstances like COVID,” she said.
“We feel very confident in our strategy, we feel that our diversified asset portfolio will continue to serve us into the future and we’re excited about the new product capabilities that we’re going to bring into the market.”
Last month, Industry Minister François-Philippe Champagne said Canadians “pay way too much for telecom services” as he signed off on the Rogers-Shaw deal and outlined conditions that Rogers and Videotron must adhere to, aimed at bolstering competition and reducing costs for customers.
But Bell’s Bibic downplayed concerns about cellphone and broadband prices in Canada, which recent studies have shown were among the highest internationally in 2022.
“It’s sadly unsophisticated, the discourse that we have on pricing,” said Bibic.
“Comparing rack rates on a website and saying “¦ that Canada’s therefore significantly more expensive is so unsophisticated, it ignores so many things. It ignores really what the consumer is actually paying.”
He noted cellphone prices in Canada remained “essentially stable” over the past year, rising 0.3 per cent despite an overall inflation rate of 4.3 per cent for March.
“And let’s not forget, we have the lowest population density of pretty much any industrialized country,” Bibic said.
“So we still have to pay for all the input costs to build these incredible networks to 99 per cent of the Canadian population.”
His comments came as BCE Inc. reported that its first-quarter profit fell compared with a year ago as its revenue edged higher. It said it earned a profit attributable to common shareholders of $725 million or 79 cents per diluted share for the quarter ended March 31, down from $877 million or 96 cents per diluted share a year earlier.
Operating revenue totalled $6.05 billion, up from $5.85 billion in the first three months of 2022.
BCE Inc. said its adjusted net earnings totalled $772 million, down from $811 million the same period last year. Adjusted profit amounted to 85 cents per share in its latest quarter, down from an adjusted profit of 89 cents per share a year earlier.
Analysts on average had expected an adjusted profit of 77 cents per share and $5.99 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
The company added more than 43,000 net postpaid mobile phone subscribers in the first quarter, up 26.5 per cent from around 34,200 last year.
Its monthly churn rate for the category – a measure of subscribers who cancelled their service – was 0.9 per cent, up from 0.79 per cent during its previous first quarter. Bibic said that reflected greater overall market activity but was still below pre-pandemic levels.
Bell’s wireless mobile phone average revenue per user was $58.15, up 54 cents from the first quarter of the prior year.
Meanwhile, Telus Corp.’s wireless mobile phone average revenue per user was $58.61, up $2.16 from the first quarter of 2022, which the company largely attributed to increased roaming as a result of more international travel.
Telus also raised its dividend Thursday as it reported its first-quarter profit fell compared with a year ago on higher interest, depreciation and amortization, restructuring and other costs. The company said it will now pay quarterly dividend of 36.36 cents per share, up from 35.11 cents per share.
The increased payment to shareholders came as Telus reported a profit attributable to common shares of $217 million or 15 cents per diluted share, down from $385 million or 28 cents per diluted share a year earlier.
Operating revenue and other income totalled $4.96 billion, up from $4.28 billion in the first three months of 2022.
On an adjusted basis, Telus said it earned 27 cents per share in its latest quarter, down from an adjusted profit of 30 cents per share a year earlier. Its adjusted net earnings totalled $386 million, down from $415 million the same period last year.
Analysts on average had expected an adjusted profit of 26 cents per share and nearly $4.90 billion in revenue.
“We’re not a one-hit wonder,” said Mawji.
“We’re very, very pleased with our results and we continue to see the fruits of our strategy come from the customers really leaning into the diversified products and capabilities that we have.”
Telus added 47,000 net mobile phone subscribers from January to March, up 2.2 per cent from 46,000 last year.
Its monthly churn rate for postpaid mobile phone subscribers was 0.7 per cent, up from 0.63 per cent during its previous first quarter.
This report by The Canadian Press was first published May 4, 2023.
Companies in this story: (TSX:BCE, TSX:T TSX: RCI.B, TSX:QBR.B)
