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 television division was hit particularly hard. In its earnings release, the company said it took $452 million in impairment charges related to its Bell Media television and radio properties.
Total operating revenue for BCE was $5.3 billion, and net earnings were $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 substantially dropped, causing problems for media companies that rely on selling ads.
Television has also been struggling because sports leagues, a big driver of advertising and viewership, have been forced to pause operations.
BCE said the number of television subscribers has essentially stayed flat, but revenue in the company’s media division was down by 31.2 per cent as ad revenue dropped and many customers trimmed their packages to save money.
Telecom companies have also had significant revenue hits because people are staying home, which means less revenue from roaming fees and data overage charges. BCE noted that wireless service revenue was down 6.2 per cent due primarily to the loss of those fees.
All three of Canada’s big telecom players reported tough financial results due to the pandemic, but BCE had the biggest hit to profit.
Rogers Communications Inc.’s net income was down 53 per cent and Telus Corp.’s 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 meeting all our cash requirements for the balance of 2020,” Glen LeBlanc, chief financial officer at 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.
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