CTV assets, wireless division push profits for telecom giant BCE Inc.

MONTREAL – A healthy contribution from BCE Inc.’s recently acquisition of national television broadcaster CTV and continued growth in smartphones pushed the telecom giant’s profit up nearly 53 per cent in the fourth quarter.

The Bell Media division, which includes the CTV assets, has outpaced expectations, chief financial officer Siim Vanaselja told a conference call Thursday after BCE reported earnings of $486 million.

“Clearly, we see the fit of media in the overall strategic contribution to Bell as being validated,” Vanaselja told analysts.

The Bell Media division was formed last April after the acquisition of CTV assets that it didn’t already own and includes 28 TV stations, including CTV, 30 specialty channels such as sports channel TSN, 33 radio stations and dozens of websites. BCE wants to put the content generated by the television network on platforms such as smartphones and tablet computers.

Smartphone growth continued during the quarter with Bell adding 132,000 net post-paid customers, mostly on lucrative three-year contracts with iPhone, BlackBerry and Android smartphones.

Vanaselja said 48 per cent of its wireless customers now use smartphones.

Operating revenues in the wireless division increased 5.9 per cent to $1.365 million in the quarter.

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In its financial results, BCE (TSX:BCE) reported earnings of $486 million, or 62 cents per share, up from $318 million, or 42 cents per share, in the same quarter a year earlier.

On an adjusted basis, earnings rose 5.1 per cent to 62 cents per share, falling short of analyst expectations by four cents a share, according to a poll by Thomson Reuters.

Revenues increased 10.4 per cent to $5.17 billion, from $4.68 billion a year earlier, but missing analyst predictions of $5.2 billion.

At Bell Canada, the company’s main subsidiary, operating revenues increased 12.6 per cent to $4.58 billion, from $4.07 billion, as the results from the purchase of CTV boosted the company’s new Bell Media unit where revenues were $578 million.

Chief executive George Cope said the telecom company will open 100 new retail outlets, either branded as Bell locations or The Source, in Western Canada in 2012 to increase its focus on wireless in that region.

Cope said BCE will step up its focus on adding more high-speed Internet customers. In the quarter, Bell added just 1,091 high-speed Internet customers versus almost 13,000 in the same quarter last year.

“We need to step up in our Internet market,” he told analysts.

Desjardins Financial analyst Maher Yaghi noted the lower Internet additions and said competitive pressure has heightened in anticipation of an increased marketing push from Bell on the video front.

Yaghi said he had estimated $4.59 billion in revenues for BCE in the quarter and adjusted earnings per share of 62 cents.

“Overall, the results show that competitive pressures in the marketing are accelerating,” he said in a research note.

Bell’s Internet Protocol-based Fibe TV added 28,000 new customers in the quarter, up 20 per cent year-over-year. Cope said Fibe TV will continue its roll out this year in some markets where cable competitor Cogeco Cable Inc. operates.

Cope said BCE will continue rolling out its next-generation wireless network, called long-tern evolution, to seven more markets this year and plans to bring the technology to rural Canada.

The telecom company announced in December that it was raising its annual dividend by five per cent to $2.17 per share for 2012. It’s the seventh increase in the past three years, and payouts will begin in BCE’s first-quarter payout on April 15.

Shares in BCE were down 84 cents, or two per cent, to $40.01 in morning trading on the Toronto Stock Exchange.