Those folks at BCE Inc. (NYSE:BCE) have been busy since it was decided that they’d stay a public company. Buying Virgin Mobile, the retail chain The Source, and who knows what else. Here is a quick snapshot from the talented Peter Rhamey at BMO Capital Markets Equity Research Group on yesterday’s quarter:
Q1/09 Stable EBITDA as Economy Impacts Revenue
Stock Rating: Outperform
Stock Price: $26.07
Target Price: $29.00 Impact - Mixed Details & Analysis BCE reported stable results with revenue (down 0.4%) slightly weaker than we expected and EBITDA(up 0.3%) slightly ahead of expectations. At the strategic level, Bell Mobility bought in the 50% Virgin minority interest in Virgin Mobile for $142mm ($250-300 per sub with valuation likely reflecting license fees). Bell also announced an agreement with TELUS to distribute Bell’s satellite service under TELUS’ Brand. BCE also confirmed it had completed its NCIB. Operating EPS of $0.57 bettered our estimate of $0.55 and consensus of $0.56. Wireline (-2.4%) and to a lesser extent wireless (3.5%) revenue growth was slightly below expectations while both wireline margins (38.3%, up 20bps) and wireless margins (40.2%, up 90bps) were up. Wireless margins may have reflected weaker subscriber additions, while wireline reflected cost controls. Net post paid wireless additions of 35K (post-paid -5K) were below our expectations but in line with TELUS pre-announced subscriber growth but ARPU was only down 1.5% (3% post-paid). Wireline metrics showed moderating trends with residential line losses slightly below expectations (-78K), DSL additions of 6k and Bell TV 12K. All in results were in line given the weak economy and we are supportive of the low-cost initiatives to expand wireless with Virgin and DTH with TELUS. Operating challenges remain, however, with the economy and a lagging wireless franchise.
Sounds like CEO George Cope is doing well during a very difficult recession.