TV and Internet bundling and smartphones, give big telecom Bell growth

MONTREAL - BCE's strategy of bundling of its TV service and high-speed Internet is starting to pay off for the communications giant, with the company reporting improved financial results and a hike its dividend.

The wireless division of the Montreal-based company, led by smartphone use, is still an anchor for revenue, but BCE is moving to capitalize on the growth of Internet-based viewing habits.

Chief executive George Cope said Thursday the strategy is paying off.

"So we continue to see with the growth of Fibe TV, the improvement in our Internet," Cope told analysts on a conference call Thursday.

BCE said its Fibe TV service, available in Ontario and Quebec, added just more than 60,000 net subscribers in the quarter, up 25 per cent compared with a year ago. It also added about 16,000 high-speed Internet customers, more than double the number added in the same quarter last year.

Fibe TV has a total of almost 480,000 subscribers, nearly twice the number at the end of 2012.

Data revenue in wireline division, which includes TV and Internet services, was $1.5 billion in the quarter, up 4.1 per cent. Cope said that was the "highlight" of the quarter for him.

He also said adding home phone service as part of the Fibe TV-Internet bundle has improved on its residential line losses in the quarter.

In its wireless division, BCE added 119,520 net postpaid customers, who generally have lucrative smartphone contracts, down almost seven per cent from the same quarter last year.

Revenue from wireless data jumped 15.2 per cent with the increasing adoption of smartphones, the report said. The company said 73 per cent of its postpaid customers are using smartphones, up from 62 per cent year-over-year.

Bell also cut the number of customers leaving to go to a competitor to 1.29 per cent, down from 1.35 per cent among its postpaid wireless customers.

BCE (TSX:BCE) raised its quarterly dividend Thursday six per cent to 61.75 cents per share, up from 58.25 cents as it reported a fourth-quarter profit of $495 million.

The profit amounted to 64 cents per share for the quarter, down from $666 million, or 86 cents per share, from the same quarter in 2012 when it had a non-cash gain on the transfer of spectrum from Inukshuk to its partners.

Operating revenues grew 5.2 per cent in the fourth quarter to $4.8 billion

Adjusted earnings for the fourth quarter were $540 million or 70 cents per share, up nearly 17 per cent compared to a year ago. That compared with analyst expectations of 69 cents per share compiled by Thomson Reuters.

Cope also said the company's media division, which includes CTV channels, specialty and pay TV channels, had another good quarter with viewership at TSN sports channel up 31 per cent year-over-year.

Despite being disappointed about competitor Rogers recently winning a multi-media distribution rights deal with the National Hockey League, Cope said TSN will be showing a high number of Montreal Canadiens, Toronto Maple Leafs and Ottawa Senators games.

Shares in BCE were up 68 cents to $46.05 in noon trading Thursday on the Toronto Stock Exchange.