Bell Aliant reports sharply lower Q1 profit

<p>HALIFAX – Bell Aliant Inc. (TSX:BA) reported a big drop in first-quarter net earnings Thursday, but the CEO said the company is on the right path where “short-term pain” will mean long-term gain.</p> <p>Net earnings for the three months ended March 31 were $84.1 million or 37 cents a share, compared with $301.3 million or $2.37 in the prior-year period.</p> <p>Operating revenue was $682 million, down from $689 million as growth in Internet and TV revenues was more than offset by declines in local and long distance revenues.</p> <p>”Our first quarter results show that the focused execution of our strategic initiatives has us on the right path,” said president and CEO Karen Sheriff.</p> <p>”With our accelerated expansion of fibre-to-the-home (FTTH), our net NAS declines continue to improve and our Internet and TV revenues are growing such that our Atlantic residential revenues have returned to positive growth after a period of decline.”</p> <p>Sheriff called the first quarter was a “very strong start to what will be a year of high execution for us.”</p> <p>”We expect EBITDA to be under pressure for the balance of this year as we incur start-up costs associated with increasing the number of customers subscribing to this new technology.”</p> <p>”That said, it is short-term pain that we can live with, considering the long-term benefits of the competitive advantage FibreOP gives us.”</p> <p>Excluding pension current service costs, operating expenses in the first quarter of 2011 were flat to the same quarter of 2010.</p> <p>EBITDA declined $9 million or 2.8 per cent in the quarter compared to the same quarter in 2010 as a result of lower revenues and the increase in pension current service costs.</p> <p>Capital expenditures in the first quarter of 2011 increased $25 million or 26.7 per cent from the same quarter a year earlier, driven by the planned expansion of the company’s fibre optic coverage areas and connecting customers to the FTTH network.</p> <p>”Capital expenditures are expected to continue to increase in the coming quarters of 2011 as Bell Aliant executes its plan to pass over 600,000 homes and businesses with FibreOP services by the end of 2012,” the company said.</p> <p>Local service revenues declined $13 million or four per cent in the quarter while long-distance revenues were down $3 million or 2.7 per cent. </p> <p>That was partly offset by Internet revenue, which grew by $8 million or seven per cent. Residential high-speed average revenue per customer grew 4.8 per cent while high-speed Internet customers grew by 3.8 per cent from the same period a year earlier.</p> <p>Stock in Bell Aliant, which reported after markets closed, was up a penny at $27.02 Thursday on the Toronto Stock Exchange.</p>