BCE profit plunges 64% on COVID-19 economic turmoil and lower TV revenue
BCE Inc. reported a 64 per cent year-over-year drop in profits and a 9.1 per cent drop in revenue for the second quarter of 2020, as the COVID-19 pandemic battered the Canadian economy.
The pain was felt across all segments of the Bell Canada empire, but the company’s TV division was hit particularly hard. In its earnings release, the company said that it took $452 million in impairment charges related to the Bell Media TV and radio properties across the country.
Total operating revenue for BCE was $5.3 billion, and net earnings was $294 million for the quarter ending June 30.
As social distancing measures have become the norm over the past five months and many businesses have been forced to suspend operations, spending on advertising has dropped substantially, causing problems for media companies that rely on selling ads.
Television has also been struggling with the fact that sports leagues have been forced to pause operations.
BCE said that the number of TV subscribers has stayed essentially flat, but with ad revenue down and many customers trimming their TV packages to save money, revenue in the company’s media division was down by 31.2 per cent.
Telecom companies have also seen significant hits to their revenue because people are staying home, which means less revenue from roaming fees or data overage charges. BCE noted that wireless service revenue was down 6.2 per cent due primarily to the loss of those fees.
While all three of Canada’s big telecom players reported tough financial results due to the pandemic, BCE saw the biggest hit to profit.
Rogers net income was down 53 per cent and Telus net income was down 39.4 per cent, compared to Bell’s 64 per cent decline.
“We remain confident in the underlying, long-term fundamentals and performance of BCE, including a healthy balance sheet and substantial ongoing free cash flow generation that provides us with considerable financial flexibility to navigate the COVID-19 recovery while more than meting all our cash requirements for the balance of 2020, Glen LeBlanc, chief financial officer for BCE, said in the company’s press release.
Due to the economic uncertainty caused by the virus, including a possible second wave of COVID-19 later this year, BCE said it would not be offering financial guidance for upcoming quarters.
• Email: jmcleod@nationalpost.com | Twitter: jamespmcleod
