Bell Aliant Regional Communications Income Fund (Bell Aliant or the Fund) announced its second quarter 2010 financial results for the Fund and Bell Aliant Regional Communications Holdings, LP).
"We continue to accelerate our strategic objectives and our results are in line with our expectations, including the reduction in operating expenses of over $20 million from the second quarter of 2009 as we reset our cost structure," said Karen Sheriff, president and chief executive officer. "While competitive expansion in our territories continued to reduce our local service customer base, our NAS declines in the second quarter improved substantially from both the first quarter of this year and the same quarter a year ago."
"The rollout of our FibreOP services is proceeding well and I am very pleased with the results we are experiencing to date, particularly the take-up of our FibreOP Bundles which include TV, Internet and home phone," continued Sheriff.
"We are making progress on our key strategies and I'm looking forward to making further improvements as we tackle the challenges of our competitive environment."
Second quarter 2010 results
Highlights
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Operating revenues were down $31 million (4.0 per cent) in the second quarter of 2010 compared to the second quarter of 2009. The decline was driven by declines in local and long distance revenues associated with lower network access services (NAS), lower data revenues and lower information technology (IT) service revenues. These decreases were partially offset by increases in Internet revenues.
Operating expense reductions of $21 million (5.1 per cent) from labour-related cost reductions and other cost containment initiatives mitigated the effects on EBITDA of lower revenues in the second quarter of 2010 compared to the same quarter a year earlier.
EBITDA decreased by 2.8 per cent, or $10 million in the second quarter of 2010 compared to the same period in 2009. Excluding the effects of a one-time $3 million adjustment that reduced senior management long-term incentive plan expenses in the second quarter of 2009, EBITDA decreased 1.9 per cent in the second quarter of 2010 compared to the same period in 2009. Because of the improvement in operating expenses, EBITDA margin improved to 47.4 per cent in the second quarter of 2010, up from 46.8 percent in the same quarter of 2009.
Local service revenue declined $16 million (4.7 per cent) in the second quarter of 2010 compared to the same quarter in 2009 as a result of NAS declines and a $6 million decrease in competitor contribution subsidies. Residential and business NAS were 6.1 per cent and 2.6 per cent lower, respectively, than a year earlier primarily as a result of increased competitive activity. Total NAS declines in the quarter improved by approximately 8,000 over the second quarter of 2009 and by 15,000 compared to those experienced in the first quarter of 2010.
Long distance revenue declined $7 million (6.9 per cent), in the second quarter of 2010 compared to the same quarter in 2009 as a result of NAS declines and migration to flat rate long distance plans.
Internet revenue grew by $7 million (7.0 per cent) in the second quarter of 2010 compared to the same period in 2009, with the number of high-speed Internet customers 6.0 per cent higher than a year ago and growth in Bell Aliant TV subscribers. Residential High Speed average revenue per customer (ARPC) reached its highest point to date, increasing 4.5 per cent over the same quarter in 2009 as a result of pricing action and customer migration to higher value services.
Other data revenues declined $8 million (7.4 per cent) compared to the same quarter in 2009 as a result of competitive pressure and migration to alternate technologies.
IT revenues declined $6 million (9.0 per cent) compared to the same quarter a year ago driven by softness in the IT services sector.
Other revenues declined $3 million (7.0 per cent) compared to the same quarter in 2009 mainly as a result of lower product sales and rentals.
Capital expenditures in the second quarter of 2010 were $125 million, up $3 million from the same quarter a year ago as fibre-to-the-home expansion in 2010 replaced 2009 expenditures for the Bell Mobility backhaul project.
Distributable cash decreased $10 million (5.6 per cent) in the second quarter of 2010 from the same period in 2009, largely driven by lower EBITDA.