BCE Inc., Canada’s largest telecommunications company and the parent of Bell Canada and CTV, raised both its dividend and its 2012 earnings forecast Wednesday after second-quarter profits easily beat analyst estimates.
“Bell’s strong year-to-date operating and financial performance and the positive outlook for the balance of the year enables the dividend increase and increased 2012 financial guidance announced today,” BCE president and CEO George Cope said after the quarterly results were released.
“Also providing support for the early dividend increase is our pending acquisition of Astral, which we expect to be accretive to overall earnings and free cash flow in 2013,” Cope added.
The $3.4-billion takeover of Astal Media still needs approval by the Canadian Radio-television and Telecommunications Commission and the Competition Bureau.
The deal faces opposition from three major Canadian media companies, which said Tuesday an acquisition of Astral would give Bell too much control over the country’s broadcasting landscape.
In unveiling a new online petition against the proposed deal, the heads of Cogeco Cable Inc., Eastlink and Quebecor Inc. raised the spectre of Bell forcing consumers to pay more money for popular television channels, or packaging those channels with less-popular ones, or other services, if the Astral deal goes ahead.
That argument was dismissed by Mirko Bibic, BCE’s chief legal and regulatory officer.
“What we’re seeing is a troika of dominant cable TV providers in their respective territories who will go to any lengths to preserve their dominance,” Bibic said.
In its results Wednesday, BCE reported a 31% increase in second-quarter net income attributable to common shareholders.
The Montreal-based company’s profit rose to $773 million or $1 per share before adjustments.
On an adjusted basis, the profit was $1.02 per common share or $788 million – 21 cents per share above a consensus estimate compiled by Thomson Reuters.
BCE’s operating revenue was $4.92 billion in the second quarter of 2012, down 0.6% from $4.95 billion in the second quarter of 2011, due to slightly lower revenues at both Bell and Bell Aliant.
Analysts expected earnings of 81 cents per share, according to estimates compiled by Thomson Reuters. Revenue was targeted at $4.96 billion for the second quarter ended June 12.
Meanwhile, the company is also raising its forecast for 2012 adjusted earnings by two cents per share, to a range of between $3.15 and $3.20 per share.
The dividend rate will be increased to $2.27 per share annually, or 56.75 cents per share quarterly, beginning with the October payout.
“Bell enjoyed a robust quarter of financial results, highlighted by exceptional wireless and media EBITDA growth, margin expansion, and significant increases in earnings and cash flow,” said Siim Vanaselja, chief financial officer of BCE and Bell Canada.
“We accelerated strategic capital investment to extend our broadband wireless and wireline footprint in support of Bell’s future operating performance while remaining committed to a strong balance sheet position to underpin our dividend growth objective.”
BCE’s proposed acquisition of Astral Media aims to create a media powerhouse that provides digital content to consumers online, on their personal computers and tablets, mobile devices like smartphones, as well as traditional TV screens.
The telecom giant has been expanding its media business by leaps and bounds, including repurchasing broadcaster CTV Inc. and buying a large stake in Maple Leaf Sports and Entertainment – owner of Toronto’s major league hockey, basketball and soccer teams, among other things.
