Bell’s Q2 wireless revenue grows significantly thanks to a surge in expired contracts

Despite some speculation from investors that Bell’s revenue growth would begin to slow down after several high flying quarters, it appears the company has yet to feel the effects of a Canadian economy in the midst of a recession.

Revenue for Bell’s parent company, BCE, grew to $5.3 billion during Q2 2015, which represents a 2 per cent year on year increase. Much of that growth was thanks to a strong performance from the company’s wireless division.

Second quarter wireless revenue grew by 10 per cent year on year from $1.54 billion to $1.69 billion. That also represents a slight increase over the $1.64 billion in revenue the company’s wireless division reported last quarter.

Much of that revenue growth has to do with a dramatic increase in average revenue per user. According to Bell, ARPU grew by 5.3 per cent year over year to $62.48. To put that growth in better perspective: in Q1, the company reported an ARPU of $60.83.

Bell is citing three reasons for the dramatic increase in average revenue per user. First, a greater number of its subscribers are now on post-paid plans; second, revenue related to customer data usage increased by 24.2 per cent this quarter; finally, and perhaps most significantly, the company cashed in an increase in market activity due to a large amount of both two-year and three-year wireless contracts coming to an end in June. That is, the company reaped the benefits of the CRTC’s decision to put an end to three-year contracts.

The effect of Canada’s wireless double cohort is perhaps best seen in the amount of revenue the company derived from the sale of devices. According to Bell’s financial report, product revenue increased by a staggering 41.9 per cent to $149 million. Similarly, services revenue grew by 7.7 per cent year on year to $1.5-billion.

In Q2, Bell added 61,033 post-paid customers. That’s actually a decrease from the 67,951 it added during the same time last year. Moreover, its customer churn rate increased by 0.08 percentage points over last year to 1.23 per cent. That also represents a step back from the churn 1.18 per cent churn rate the company was able to achieve last quarter. However, as noted above, despite a significant number of customers leaving Bell, more people joined the company’s wireless service than left it.

All told, Bell now has 7,206,353 total postpaid wireless customers, a 4.4 per cent increase over the same period last year. Additionally, 77 per cent the company’s post-paid subscribers are on smartphones, and the proportion of them on the company’s LTE network also increased to 57 per cent.

[source]Bell[/source]