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Wednesday, May 06, 2009
Bell Aliant reports solid first quarter 2009 results
Halifax, NS – Bell Aliant Regional Communications Income Fund (Bell Aliant or the Fund) (TSX: BA.UN) today reported the Fund’s and Bell Aliant Holdings LP’s first quarter 2009 financial results, demonstrating continued solid performance.
“We are making good progress on our 2009 strategy and despite the economic downturn, our results for the quarter are solid and well in-line with our expectations,” said Karen Sheriff, President and Chief Executive Officer. “We are continuing to invest in broadband expansion and increasing our high-speed customer base. With the completion of a significant management restructuring in mid February, we are resetting our cost structure and beginning to see operational and financial benefits. We expect that this along with our streamlined capital spending plan will support cash flow growth as we move forward.”
“The execution of our strategy is well underway. Service to our customers continues to improve and we have taken steps to simplify and strengthen our brand presence. We are introducing Bell Aliant as our market-facing brand in Atlantic Canada. In Ontario and Quebec, we will continue to leverage our existing brands while building a closer linkage to the Bell Aliant brand,” said Sheriff.
Bell Aliant Holdings LP’s first quarter financial highlights
| (In millions of dollars) | Q1 2009 | Q1 2008 | Percentage Change |
| Operating Revenue | $828 | $838 | (1.2%) |
| EBITDA | 356 | 353 | 0.7% |
| Capital Expenditures | 107 | 95 | 13.0% |
| Distributable Cash | 197 | 207 | (5.0%) |
Operating revenues were down $10 million or 1.2 per cent in the first quarter of 2009 compared to the first quarter of 2008. Local, long distance, and other revenue declines more than offset increases in Internet and Information Technology (IT) revenues.
Internet revenue grew by $10 million or 10.8 per cent in the first quarter of 2009, compared to the same period in 2008, with the number of high-speed Internet customers 8.6 per cent higher than a year ago, and residential high-speed Internet average revenue per customer (ARPC) 5.3 per cent higher than the same quarter in 2008.
IT revenue grew $9 million or 8.6 per cent from the same period last year, with IT equipment sales growth of $21 million offsetting declines in IT services revenues, resulting from the recognition of deferred revenues for a significant health care project in the first quarter of 2008.
Local service and long distance revenue declined by $9 million (2.5 per cent) and $7 million (5.9 per cent), respectively, in the first quarter of 2009 compared to the same quarter in 2008, with network access services (NAS) 3.9 per cent lower than a year ago. After adjusting for the NAS added through the acquisition of the assets of Kenora Municipal Telephone Services (KMTS) in the first quarter of 2008, NAS declines in the first quarter of 2009 increased modestly, by approximately 6,000, from the same period a year earlier, in line with management’s expectations discussed in early February.
Other revenues declined $12 million or 20.4 per cent from the same quarter in 2008, primarily as a result of lower outsourcing and other miscellaneous revenues.
EBITDA in the quarter increased by $2 million from the same quarter a year earlier, as operating revenue declines were offset by labour-related cost reductions and other cost containment initiatives. EBITDA margin improved to 43.0 per cent, up from 42.2 per cent from the same quarter in 2008.
Capital expenditures in the first quarter of 2009 were $107 million, up $12 million (13 per cent) from the same quarter a year ago, driven by the previously announced network enhancements to provide upgraded wireless backhaul functionality for Bell Mobility that began in the fourth quarter of 2008. Capital intensity for the first quarter of 2009 was 13.0 per cent, below the low end of Bell Aliant’s 2009 annual guidance of 13.5 – 14.5 per cent, as the first quarter reflected typical seasonality associated with capital spending.
Distributable cash decreased $10 million (5.0 per cent) in the first quarter of 2009 from the same period in 2008, primarily as a result of higher capital spending as compared to the same period last year. Expected improvements in operating costs as restructuring plans are completed, and lower planned capital spending for the balance of 2009 as compared to 2008, are expected to result in increased distributable cash in 2009 from 2008 levels, consistent with Bell Aliant's 2009 guidance range.
The Fund maintained its distributions to unitholders and reported distributions of $92 million or $0.725 per unit for the quarter ended March 31, 2009.
On April 28, 2009 Bell Aliant LP filed a short form base shelf prospectus, allowing for the issuance of up to $1.5 billion of medium term notes, with maturities of not less than one year. The prospectus expires 25 months from the date of filing. Any notes issued will be unsecured, will rank
pari passu with all other unsecured and unsubordinated indebtedness incurred by Bell Aliant LP and will be issued at rates of interest or at prices determined by Bell Aliant LP from time to time based on a number of factors, including general market conditions.
On May 1, 2009, CAE and Bell Aliant announced that CAE’s acquisition of Bell Aliant’s Defence, Security and Aerospace (DSA) business unit, operated by the xwave division of Bell Aliant Regional Communications LP, had been completed with proceeds of $16 million received on closing. An additional $8.5 million of proceeds is contingent upon the satisfaction of various conditions.
Supplementary financial informationMore information on the Fund’s and Bell Aliant Holdings LP’s Q1 results can be found in Bell Aliant’s supplementary information package, first quarter 2009, available at
www.bellaliant.ca.
Analyst conference call A conference call with the financial community is scheduled for Thursday, May 7, 2009 at 9:00 a.m. (Eastern). The dial-in numbers are (866) 299-6657 or (416) 641-6121 for Toronto area participants. Media are invited to attend in a listen-only mode. The title of the call is "Bell Aliant First Quarter 2009 Financial Results." A replay of the session can be heard from May 8 to May 21, 2009. To access the replay, dial (800) 408-3053 or (416) 695-5800 and enter the passcode 7001021#.
A live audio webcast of the conference call can be accessed on
www.bellaliant.ca under the Investor Relations section. A replay of the conference call will be available on the website for one year.
NotesThe information contained in this news release is unaudited.
(1) Bell Aliant derives virtually all of its income from its indirect ownership in Bell Aliant Regional Communications Holdings, Limited Partnership (Bell Aliant Holdings LP). Bell Aliant Holdings LP’s results combine the results of Bell Aliant Regional Communications, Limited Partnership (Bell Aliant LP), Télébec, Limited Partnership (Télébec) and NorthernTel, Limited Partnership (NorthernTel).
(2) On February 1, 2008, Bell Aliant Holdings LP completed the acquisition of the assets and operations of Kenora Municipal Telephone System (KMTS). Bell Aliant Holdings LP’s financial results and subscriber metrics include KMTS data from that date onward.
(3) Percentage changes quoted in this release related to dollar values are based on amounts rounded to the nearest hundred-thousand, consistent with disclosure in the Fund’s and Bell Aliant Holdings LP’s management’s discussion and analysis and supplementary information package. Dollar values quoted in this release are rounded to the nearest million unless otherwise stated.
(4) Bell Aliant Holdings LP defines EBITDA, a non-GAAP measure, as operating revenue less expenses (earnings) before interest, income taxes, depreciation and amortization expense, net benefit plans cost, and restructuring and other charges. For a reconciliation of EBITDA to the most closely comparable GAAP measure, please refer to Bell Aliant Holdings LP’s management’s discussion and analysis for the first quarter of 2009.
(5) Bell Aliant defines EBITDA margin, a non-GAAP measure, as EBITDA as a percentage of operating revenue.
(6) Bell Aliant defines capital intensity as capital expenditures as a percentage of operating revenue.
(7) Bell Aliant defines distributable cash, a non-GAAP measure, as cash from operating activities of continuing and discontinued operations of Bell Aliant Holdings LP and of the Fund, plus operating items funded through cash reserves or borrowings, such as working capital, pension deficit funding, restructuring and other charges and cash capital taxes in excess of normalized levels, plus amounts for current income tax provisions plus other elements of working capital changes that do not affect cash flow, less capital expenditures. For a reconciliation of EBITDA to the most closely comparable GAAP measure, please refer to Bell Aliant Holdings LP’s management’s discussion and analysis for the first quarter of 2009.
Forward-looking statements This news release contains forward-looking statements concerning anticipated future events, results, circumstances or expectations, including statements relating to operating expense reductions, broadband expansion and increasing high-speed customer base, strengthening brand presence, cash flow and distributable cash growth, and capital expenditure plans. Unless otherwise noted, such statements describe management’s expectations at May 6, 2009. These statements are based on management's beliefs regarding future events, and are subject to inherent risks and uncertainties that are beyond management's control. Therefore, actual results may differ materially from what is predicted. Assumptions made and risk factors considered in preparing our forward-looking statements are discussed in detail in Bell Aliant’s fourth quarter 2008 earnings and 2009 guidance news release dated February 2, 2009, as well as in the Fund’s and Bell Aliant Holdings LP’s 2008 annual management’s discussion and analysis (MD&A) and annual information forms, and their first quarter 2009 MD&As, which are available at
www.bellaliant.ca or at
www.sedar.com. All forward-looking statements in this news release are qualified by these cautionary statements, and there can be no assurance that the results or events predicted will be realized. Except as may be required by Canadian securities laws, Bell Aliant disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason. Readers should not place undue reliance on any forward-looking statements.
About Bell AliantBell Aliant (TSX: BA.UN) is one of North America’s largest regional communications providers. Through its operating entities it serves customers in six Canadian provinces with innovative information, communication and technology services including voice, data, Internet, video and value-added business solutions. Through its xwave offices, Bell Aliant also provides IT professional services in Canada and the US. Bell Aliant’s employees are committed to deliver the highest quality of customer service, choice and convenience. More information can be found at
www.bellaliant.ca.
Q1 2009 Financial documentsFor more information contact:Media Relations: Kelly Gallant
866-762-6540
kelly.gallant@bellaliant.caInvestor Relations:Zeda Redden
877-487-5726
zeda.redden@bellaliant.ca
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