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Bell Aliant Q1 profit falls as operating arm reaps less revenue from services

HALIFAX - The company that operates the Bell Aliant telecom system in Eastern Canada says net income dropped to $76.7 million in the first quarter, down 14 per cent from a year ago, as it felt the combined effects of higher taxes, lower revenue from older services and the cost of adding subscribers to its TV service amid stiff competition.

Halifax-based Bell Aliant said Wednesday that it added about 11,000 high-speed Internet customers and 11,700 Internet protocol TV subscribers in the quarter. As a result, it had had 963,048 high-speed Internet customers at the end of March, up from 927,111 a year earlier, and 189,781 IPTV customers, up from 137,270 in the first quarter of 2013.

Bell Aliant, which operates throughout the four Atlantic provinces and in parts of Quebec and Ontario, is aiming to woo customers away from cable companies, such as Halifax-based Eastlink and Toronto-based Rogers (TSX:RCI.B), as its fibre optic network becomes available to a growing number of residential customers.

However, it has been faced with intense price competition — particularly in New Brunswick and in Newfoundland, where Bell Aliant and Rogers have been discounting bundled services that include TV, phone and Internet services.

Bell Aliant GP, the operating arm of Bell Aliant Inc. (TSX:BA), said its revenue slipped 1.2 per cent to $675.7 million from the first quarter of 2013, as declines in revenue from local, long-distance and wireless phone and other services more than offset higher data revenue.

In the first quarter of 2013, Bell Aliant GP had $89.3 million of net income with $683.6 million in revenue.

RBC Capital Markets said after the quarterly report that Bell Aliant's revenues were slightly lower than estimates of $679 million but that adjusted earnings, at 40 cents per share, were penny above estimates of 39 cents per share.

"Despite an intense competitive environment (particularly in New Brunswick and Newfoundland), the company continues to successfully load its fibre network," RBC Capital analyst Drew McReynolds wrote.

"Management continues to manage operating costs very effectively despite the growth in lower-margin television revenue and subscriber loading (onto the network)."

Bell Aliant Inc. (TSX:BA), which owns the operating company in partnership with Montreal-based BCE Inc. (TSX:BCE), said its its first-quarter net income fell 16 per cent compared with the same time last year as it received $13.8 million less income from the operating arm.

The company's shares closed Wednesday at $27, up four cents, on the Toronto Stock Exchange.

— Follow @DavidPaddon on Twitter

The Canadian Press

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