The non conformer's Canadian Weblog

August 7, 2009

Bell, BCE own profitability..

  

The departure of Nortel Networks Corp.’s CEO, a once proud flagship of Bell,  and most of its board marks the effective end of the 124-year-old company. But the remarkable aspect is that Nortel lasted as long as it did, given its rapid descent from national hero to national disgrace.  “I knew when I joined the board it was high-risk,” said Harry Pearce, who stepped down as chairman Monday after four years as a Nortel director. The litigation lawyer – a former chairman of Hughes Electronics and a former vice-chairman of General Motors – said he was under no illusions when he came on board in January, 2005, after a major accounting scandal had pushed Nortel close to the brink.  “Pearce an ex-General Motors executive – there you go, Nortel hired a blind man to lead the blind. And Nortel’s failure is not due to external factors as he states (poor economy, meltdown in capital markets, blah, blah, blah), rather it was p$$$ poor management, fraudulent accounting, etc. I don’t see any of Nortel’s competitors having problems staying afloat, in fact they all seem to be prospering in these trying times.”  http://www.theglobeandmail.com/globe-investor/ambition-gave-way-to-a-harsh-reality-pearce-zafirovski/article1246625/

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“During the dot.com rush, senior BCE management embarked on a scheme to turn the company into a multi-media, converged entity. To do this they stripped Bell Canada – the telephone company – of people and used revenue formewrly used to upgrade the network, to buy the Globe and Mail and the CTV television network. They failed to support the infrastructure to compete with the cable companies. But the dazzle in their eyes was caused by the almost mythical idea of multi-media empires delivering content to homes throughout North America on phone lines. It was a great idea except they forgot they were still running a phone company and that the infrastructure needed to be upgraded FIRST. It was like putting a $50,000 bathroom in a house with old windows and a leaking roof. Today, Bell has a patchwork network, with the best service in the major urban centres (high-speed internet and cell coverage), while smaller markets make do with less. Bell has been bleeding hundreds of thousands of customers for several years, service has fallen and, as I mentioned, it is patchwork quality, depending on where you live.  In the corporate boardrooms incompetence seems to pay. Jean Monty, former CEO, raked in millions when he left in shame, and I can hardly wait to see Sabia’s nice little package when he turns the lights out.”  http://wordylefty.wordpress.com/2007/06/26/the-ugly-demise-of-bell-canada-june-26-2007/
 
It seems that Bell, BCE continually now faces bad news about it’s own profitability..
  
Needless to say greedy Bell and the others had expected to gouge all if it’s customers, old and new  forever as well but things rarely go as expected especially for Bell for the customers are not stupid. Bell’s promises of future revenue increases  and improved great services based on their past performances to date also are not valid, reliable. It seems the Zebra too still cannot change it’s stripes. http://www.theglobeandmail.com/report-on-business/recessionary-dip-or-permanent-decline/article1244199/
 
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Canada’s largest wireless companies are now clearly wrestling with their first real decline in smart  phones customers’ monthly spending, and wondering if it is a sign of the times or a harbinger of the future. “The companies have spent billions to deploy networks and are stocked with fashionable smart phones. But even as Canadians snap up the latest handsets and sign three-year data contracts, operators are seeing average revenue from each customer fall. Is the drop a result of the recession, or does it reflect the more competitive landscape that is about to see even more players enter the field? BCE’s Bell Canada said yesterday that it generated 4 per cent less money on average from its wireless customers in the last quarter, compared with a year earlier.That follows similar news last week from rival Rogers Communications Inc. , which reported a drop of more than 2 per cent. Today. The downward trend of what the industry calls ARPU – for average revenue per user – is significant for Bell, Rogers and Telus because they rely on wireless as their engine for growth.  As part of its second-quarter financial report, the company said it signed 45,000 new wireless customers in the period, compared with 83,000 in the second quarter of 2008. In addition to the fewer new accounts, Bell said ARPU fell $2.22, to $52.05 a month. Both results fell short of analysts’ expectations and crimped BCE’s overall performance, with profit dipping 4 per cent and sales down 2 per cent. “People are actually using the product less in the economy, from a voice perspective,”  “A decline in employment means a declining use in wireless and we are seeing that. BCE executives agree that tougher competition, especially among their discount brands, is a factor. But they say it is being offset by customers’ adoption of new data services, which generated 28 per cent more revenue in the quarter from a year earlier.  A key step involves cutting costs, which BCE has done by eliminating several thousand jobs over the past year. Executives said it has also improved quality of service, eliminating many customer calls. General and administrative expenses were down 11 per cent in the quarter, which helped bump gross margins up to 40 per cent. Other steps include the recent purchase of the 50 per cent of Virgin Mobile Canada Bell didn’t already own; the acquisition of electronics retailer The Source and its 750 stores nationwide;  and a more aggressive branding campaign. In addition, the company is building a new national wireless network on the leading wireless standard of the day, called HSPA. Bell is sharing the development costs with Telus and both companies   expect  to launch service on it by year-end.  Bell TV turned in the best performance of the quarter, with video revenue rising 9 per cent to $389-million.

Meanwhile , Bell Canada is taking the federal broadcast regulator to court to stop the country’s big networks from charging cable and satellite companies for their TV signals. Bell, which owns Canada’s largest satellite service, known as Bell TV, alleges in documents filed with the Federal Court of Appeal that the broadcast regulator has overstepped its jurisdiction and has asked a judge to intervene. The move comes after the Canadian Radio-television and Telecommunications Commission said in May it would let large conventional networks, such as CTV and Global Television, negotiate with cable and satellite carriers on compensation for their signals. The court filing is unorthodox, since it is extremely rare for a company to challenge the CRTC so directly. The bitter debate has driven a wedge down the middle of the broadcasting industry in Canada, and these court filings demonstrate how contentious the issue has become. There is already tension between Bell Canada and CTV, the television network in which Bell owns a stake, and this case will only increase it since the two sides could meet in court. Bell owns 15 per cent of CTVglobemedia, which is the parent company of CTV and also owns The Globe and Mail.  Paul Sparkes, CTV executive vice-president of corporate affairs, also reserved comment. “As the matter is before the courts, it’s not appropriate for us to comment on the substance of the appeal,” he said. “We are confident that the Federal Court of Appeal will see this for what it is, a stall tactic.” ” Interesting how Bell fought very hard and successfully to get the feds to bring in laws against people who use “black boxes” to take Bell’s satellite signals without paying. Now Bell wants to take the network’s signals, without paying for them, and then charge customers for these signals. Seems very inconsistent to me! ”  http://www.theglobeandmail.com/report-on-business/bell-takes-tv-fight-to-court-to-escape-regulators-squeeze/article1243859/

It is no surprise to me that mobile companies are overpricing their wireless internet services so that only businesses can afford this service.  A wireless spectrum auction last year attempted to improve competition but there is still lots of work to be done. Most mobiles available in Canada come locked to a multi-year contract  http://healthinformaticist.wordpress.com/2009/06/09/oh-canada-isp-censorship-and-internet-slippage/

 

see also

https://thenonconformer.wordpress.com/2009/08/10/liberals-politicians-do-lie-too/

https://thenonconformer.wordpress.com/2009/08/07/bell-bce-own-profitability/

https://thenonconformer.wordpress.com/2009/08/12/11989/

 

 

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