Bell Canada 3rd Quarter Profits Hit by Restructuring Costs

Bell Canada (BCE) has reported that its 3rd quarter profits dropped by 34% caused by restructuring charges as the firm prepares to delist from the stock market. Bell's operating revenues grew by 1.8% to $3.76 billion (US2.9 billion) this quarter as growth in wireless, video, and data revenues more than offset declines in local and access, long distance, and equipment and other revenues. Revenues from Bell's growth services portfolio of wireless, video, high-speed Internet and other services, such as ICT solutions, grew by 8% and now represent 60% of Bell's revenues.

Bell's operating income was CA $451 million (US$349 million), or 34% lower than last year due to restructuring and other charges of $320 million (US$247.6 million) this quarter. These charges include amounts for workforce reduction initiatives, the proposed privatization transaction, and the relocation of employees and the closing of real estate facilities. Adjusted for these charges, Bell's operating income grew by 3.6%.

Bell had previously announced a newly streamlined and customer-focused structure that resulted in a 30% reduction in the number of Bell executives and an overall 15% reduction in management ranks, or 2,500 positions. Combined with other workforce reductions undertaken earlier this year, these changes are expected to provide annualized savings of approximately CA $300 million.

Bell's EBITDA grew by 2.4% to $1.425 billion (US$1.1 billion) due to stronger wireless revenues and lower subscriber acquisition costs combined with relatively stable Bell Wireline EBITDA.

The Bell Wireless segment had 113,000 postpaid net activations, or 49% more than last year, with postpaid churn improving to 1.1% from 1.4%. Total net activations were 117,000, reflecting a decrease in prepaid net activations to 4,000 from 61,000 the year before. Total Bell Wireless operating revenues increased by 9.3% and Bell Wireless EBITDA grew by 6.0%.

Bell invested CA $566 million of capital this quarter, or 1.2% less than Q3 2007. Bell also invested CA $741 million in advanced wireless services (AWS) spectrum licences this quarter.

Earlier this year the details of a buyout of the firm lead by the Ontario Teachers' Pension Plan were finalised following several challenges from minority shareholders.

Posted to the site on 29th October 2008