Higher programming and content costs in its Bell Media segment weighed on the financial results of BCE Inc. (TSX: BCE)
SmallCapPower | August 4, 2017: BCE Inc. (TSX: BCE) Thursday reported second-quarter results with revenue up 6.7% in Q2 to $5.7 billion. This was driven mainly by a 7.0% growth in service revenue, reflecting increases at both Bell Wireless and Bell Wireline, which included contributions from acquisition of Manitoba Telecom Services Inc (MTS) completed on March 17, as well as higher year-over-year revenue at Bell Media. Product revenue grew 3.4% to $364 million, the result of increased sales of premium mobile devices and a greater number of wireless customer transactions.
Adjusted EBITDA increased by 5.0% in Q2 2017, compared to the prior year, driven by growth across all three segments, attributable to the flow through of higher organic service revenues, coupled with the favorable contribution from the acquisitions of MTS and Q9. The growth in adjusted EBITDA was moderated by significant regulatory pressures in wireless and wireline segments, greater investment in wireless subscriber retention and acquisition, as well as higher programming and content costs in Bell Media segment.
Net earnings decreased 2.3% to $811 million in Q2, while net earnings attributable to common shareholders totaled $762 million, or $0.84 per share, down 2.1% and 5.6%, respectively, due to increased net depreciation and amortization expense, higher interest expense and lower other income. The increase in BCE’s average number of common shares outstanding, due to the shares issued for the equity component of the MTS acquisition, further contributed to earnings per share dilution this quarter. Excluding severance, acquisition and other costs, net losses or gains on investments, impairment charges and early debt redemption costs, adjusted net earnings decreased 3.9% in Q2 to $792 million, or $0.88 per common share.
In terms of valuation, BCE currently trades at TTM price to sales value of 2.23x, price to book value of 3.68x and forward PE of 16.58x.
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