Bell Aliant Profits in Fourth Quarter of 2011

by Jordan Richardson on February 9, 2012

Bell Aliant says that it’s back in the black, posting its fourth quarter results from 2011 and beating estimates in the process. In the year-earlier, the telecommunications service provider took a loss of more than a billion dollars and took a significant writedown.

On Tuesday, Bell Aliant announced that it posted a fourth quarter profit of $80 million (35 cents per share) compared to the $1.4 billion loss from 2010’s fourth quarter. At that point, the company took a $1.7 billion “non-cash writedown” against its intangible assets.

Bell Aliant found its fourth quarter operating income down by two percent to $701 million compared to the $715 million of 2010’s fourth frame. This was largely attributed to declines in revenue avenues like long distance and local calling. Luckily for Bell Aliant, the difference appears to be made up in wireless and data growth.

“We met or exceeded all of our financial targets while executing an aggressive construction program expanding our fibre-to-the-home coverage area,” said Karen Sheriff, president and chief executive officer of Bell Aliant. “This expansion is improving our opportunities for revenue growth by giving more customers access to the best Internet and TV service bundle available in our markets.”

Some, like analyst at UBS AG Phillip Huang, don’t seem convinced that the strategy is something that’ll work for the long term. “Given most of Bell Aliant’s footprint is not fibre-to-the-home (FTTH) technology for the foreseeable future, we believe management’s focus strictly on FibreOP is unsustainable,” Huang said in a note to clients. “Competition may soon require Bell Aliant to devote greater attention and capital to its non-FTTH footprint in order to maintain its customer base.”

Bell Aliant says that it will connect close to a million homes and businesses to its fibre optic network, which is about 50 percent more than estimated initially. The trouble, says Huang, is that the company has too many other financial obligations to make as much of an investment in FTTH technology as they should.

To continue raining on the Bell Aliant parade, Huang noted that the company is “vulnerable” to increasing cable competition in eastern Canada and will need to pick up its promo game to stay afloat.

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