BCE Profits Jumps 70%, Set to Relaunch Discount Brand Solo Mobile

by Gaurav Kheterpal on August 6, 2010

BCE Inc. reported its second quarter earnings on Thursday announcing that its quarterly profit was up 70 per cent from the same period last year. With better than expected Q2 results, the company said that it would raise its dividend five percent to $1.83.

During the last couple of years, BCE adopted an aggressive cost reduction exercise under the leadership of George Cope and the results as now beginning to show as it comfortably beat second-quarter earnings expectations.

As a testimony of its strategy to remain ‘competitive’, the company is now repositioning Solo Mobile as a discount brand with unlimited calling and texting plans in order to take on the likes of Chatr, Public Mobile and Mobilicity.

BCE Q2 results are highly impressive – profit of $590-million and earnings per share of 78 cents, compared with  $346-million and 45 cents last year. Revenues increased 3.3 percent to $4.44 billion and net income climbed 71 percent to $590 million, or 78 cents a share, largely driven by a massive 45 per cent increase in wireless data revenue. BCE has upped its prediction for sales growth to 2-3%. The carrier added 98,459 new wireless customers and is comfortably placed as Canada’s second-largest wireless carrier after Rogers Communications Inc.

Though BCE added nearly 102,754 postpaid subscribers during the last quarter, it lost 4,295 pre-paid customers largely to low-cost new entrants such as Wind Mobile, Mobilicity and Public Mobile. The carrier also lost 129,147 residential and business landline users in the last quarter.

Cope understands that competition is bound to get more intense with Rogers Chatr & Vidéotron Ltée joining the fray, therefore he is leaving no stones unturned in ensuring that BCE is well prepared to fight it out in the next big price war. The company plans to rebrand Solo Mobile as an unlimited service to address the ‘Chatr threat’. Solo has been around since 2005 but it has been lost in the shadows ever since BCE bought Virgin Mobile in 2009. While the company has projected Virgin Mobile as its premium discount brand, analysts have been speculating that BCE might be about to pull the plug on Solo Mobile. As things stand, Solo is all set to get a new life pretty soon.

I have no doubt that BCE (Virgin, Solo) is following the footsteps of Rogers (Fido, Chatr). I’m not a big fan of having dozens of brands with little or no differentiation between them and I’m pretty vocal about it as well. While more discounts are welcome, more discount brands isn’t exactly a reason to cheer. What do you think? Please share your opinion by leaving a comment below this post.

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Written by: Gaurav Kheterpal. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS>, Twitter >, Identi.ca >, or Friendfeed >

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August 9, 2010 at 9:40 pm

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