Bell Wireless Results Q1 2012

Bell Wireless Results Q1 2012

Bell’s wireless results were fantastic.  Both in terms of metrics and financials, Bell really did well in Q1 2012.  Until TELUS reports, we cannot be 100% sure, but it looks like in an overall market that we relatively flat in terms of gross adds, Bell focused on postpaid subscribers in business and out West, to bring home a great quarter.  This indicates an exceptional example of delivering to plan, where execution must have been harmonic to be able to achieve the following three metrics together:

Gross Adds

Postpaid gross was down but only 2% down, (Rogers was up) but still better than five out of the last six Q1 postpaid gross results.  Prepaid gross was down a whopping 24% over Q1 2011, confirming Bell strategy to focus on the more lucrative postpaid business.

Net Adds

Net losses (21,327) were not good due to huge losses in prepaid subscribers and postpaid

Rogers and Bell Prepaid Nets Q1 2012

Incumbent prepaid nets in Q1 2007-2012

net adds were 22.4% lower at 62,576.  The lower postpaid nets was driven by a combination of lower postpaid gross and postpaid churn of 231,000 subscribers.

Churn

Prepaid unsurprisingly got worse at 3.9% but postpaid churn improved in terms of percentage from 1.41% to 1.35%.  This is very impressive but especially since we did not see a huge retention spend (approximately $120m) and this improved sequentially from 1.52% in Q4 2011.  A dramatic turnaround in one quarter indeed.  Churn still remains our biggest concern with Bell, but if they can turn this into a trend, that would be exciting for shareholders.

EOP

Postpaid EOP growth was slow at 2.2% versus Q1 2011 when it was 5.2%, but this was largely driven by higher churn (lower percentage of a bigger base lead to 231K postpaid subscribers leaving vs. Q1 2011 where only 219K left.  Even Rogers with dire results grew at 3.3% off of a large gross loading number and lower postpaid percentage churn.

Revenue & EBITDA

Revenue was up 5.1% (6% for service revenue which is the important number) and EBITDA up a very impressive 13% on widening margins, which grew y/y from 36.9% to 39.5%, nearly breaking the key threshold of 40%.  In the call they said they had 500 fewer employees in wireless, but this does not account for all of the improvement.  They must have executed both their hardware subsidies and their smartphone upgrades incredibly well since retention spend and COA were still very modest.

Impact on New entrants (WIND, Mobilicity & Public)

Looking at a combination of Bell and Rogers, the incumbents have already lost 50% more prepaid subscriber than the total for Q1 2011.  This bodes well for new entrant loading.  Assuming they do not have high churn numbers, we should see significant net and EOP gains for the new entrants.

Summary

Comparing this quarter with Q1 2011, Bell did really well.  It will be interesting to see how TELUS does as this will really tell us who executed best in what looks to have been a competitive quarter.   Great quarter – well done.

No comments

Protected: Rogers Reports

This post is password protected. To view it please enter your password below:

Enter your password to view comments.

Protected: Wireless Results Q4 2011

This post is password protected. To view it please enter your password below:

Enter your password to view comments.

Q32011 COA

COA

Chart1:  COA does not seem to have gone up much over the years despite a massive increase in smartphones.  Strange!

Cost of acquisition

Wireless cost of acquisition

COA in Q3 2011 could have stayed down ahead of the iPhone 4S launch?

 

No comments