TORONTO _ BCE Inc. reported strong subscriber growth on Thursday, which company executives said were fuelled by Bell Canada’s network improvements and new services.
The company added a total of 198,005 internet, IPTV and postpaid wireless customers _ up 8.8 per cent from last year _ although it also saw declines in pre-paid wireless, legacy wireline and satellite TV services.
Several analysts said in research notes and on a conference call with BCE executives that they were surprised by the strength of additions in IPTV, the fibre-optic television service that competes most directly with cable companies.
Drew McReynolds of RBC Dominion Securities raised his price target by $1 for BCE stock to $62 per share _ slightly above its current market price _ and noted IPTV subscriber growth exceeded satellite TV losses by 2,000 activations.
He wrote that “we believe BCE is laying the groundwork to strengthen its wireline competitive position in 2018 and beyond.”
But he added that, over the long term, RBC expects there will be a “stalemate” in the competitive battle between Canada’s main telecom and cable rivals because most of them own both wireless and wireline services.
Chief executive George Cope told analysts said that Bell’s introduction of the Alt-TV product, a user-installed service that charges $10 to $15 per month less than its main fibre optic products, had been popular with condo dwellers.
“We think that positions us very well . . . from a price-competitive perspective,” Cope said.
Among the newer players in Canada’s television industry have been over-the-top services such as Netflix, which compete against the telecom and cable companies on price and an alternative lineup of content.
BCE’s (TSX:BCE) network enhancements also come as Canadian cable companies _ including Rogers Communications Inc. (TSX:RCI.B) and Shaw Communications Inc. (TSX:SJR.B) _ are nurturing a new generation of TV service.
Shaw, which competes more with Telus (TSX:T) in western Canada’s TV market, has already begun to offer its new video offering based on X1 technology from Comcast _ the U.S. cable giant.
Rogers, which is a more direct competitor with BCE in television in Ontario and Atlantic Canada, said last month that it’s still in the testing and planning stages for bringing out its new X1 service in stages next year.
Wade Oosterman, group president for Bell Canada and BCE, said the company has been able to grow its IPTV landline subscriber base quarter after quarter.
“We are obviously working on things to keep our product ahead of theirs. And time will tell to see if that differentiation is valued by consumers. Our bet is that it will be,” Oosterman said in an interview after the conference call.
BCE added 44,424 high-speed internet subscribers during the quarter, bringing the total to 3.8 million. It also added 36,399 internet-protocol TV subscribers during the quarter, bringing the total subscriber base of IPTV to 1.5 million.
Bell added 117,000 additional post-paid subscribers to its wireless services in the three months ended Sept. 30 _ the best third-quarter for BCE since 2012
Cope declined to answer analyst questions about how customers are responding to the new Apple iPhone X _ coming out Friday _ or the iPhone 8 that has been on the market since late in the third quarter ended Sept. 30.
“We’re just happy to have products for the fourth quarter. It should create a lot of excitement and a lot of traffic in a very important selling season with a lot of advertising support,” Cope told analysts.
Earlier Thursday, BCE announced that it earned $770 million attributable to shareholders in its latest quarter, up from $752 million a year ago. Operating revenue totalled $5.68 billion, up 5.0 per cent from $5.41 billion.
The profit amounted to 86 cents per share for the quarter ended Sept. 30, down from 87 cents per share in the same quarter last year when it had fewer shares outstanding.
Some of the year-over-year growth was due to BCE’s acquisition of Manitoba Telecom Services, which closed in March, for $3.9 billion in cash and shares.