Bell Aliant reports first quarter 2013 results

• Operating revenues up $2 million driven by FibreOP^TM growth
• Best year-over-year EBITDA rate-of-change since 2009
• Free cash flow up $15 million
• FibreOP TV customer additions of 15,600 up 47 per cent from Q1 2012
• FibreOP Internet customer additions of 17,900 up 40 per cent from Q1 2012
• Fibre-to-the-home (FTTH) footprint expands to 679,000 premises

This news release contains forward-looking statements. For a description of the related risk factors and assumptions please see the section entitled "Forward-looking Information" later in this release.

HALIFAX, May 1, 2013 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported financial results for the first quarter of 2013 for Bell Aliant Inc. (Bell Aliant) and Bell Aliant Regional Communications Inc. (Bell Aliant GP).

"Returning to revenue growth is a key milestone in our strategy and our first quarter results have us off to a great start for 2013," said Karen Sheriff, president and chief executive officer, Bell Aliant. "Successful execution of the strategy we initially launched in 2009 has resulted in progressive improvements throughout the business over the last four years that are now turning the revenue trajectory positive, demonstrating that our plan is working.

"In the first quarter of 2013, we achieved our best quarterly year-over-year EBITDA rate-of-change since Q4 2009. We did this despite a $4 million regulatory charge taken in the quarter, most of which was a retroactive charge for 2012. Expansion of our FTTH network and solid cost management continued to drive our improving results. As I have said many times, revenue growth will come first, and EBITDA growth will follow. I am very pleased to see these improving trends coming to pass.

"We are approaching a level of critical mass with our FTTH footprint, with substantial capacity to add more FibreOP customers to this world-class network. The competitive environment is intense and we are prevailing by offering customers in our FTTH markets the best Internet technology available today and a premium IPTV service, giving us a competitive advantage that will serve us well for years to come. FTTH, with all of its benefits, is the key to our future success.

"While our results are improving, we have much in front of us that we still need to achieve and must continue to execute. We have a solid plan and with the results we have demonstrated to date, my confidence in our ability to return Bell Aliant to profitable growth continues to build."

First quarter 2013 highlights¹

Bell Aliant Inc. reported net earnings of $84 million for the first quarter of 2013, up $1 million from the first quarter of 2012. Earnings per share and adjusted earnings per share were $0.36 and $0.43 respectively, consistent with the first quarter of 2012.

First quarter financial highlights of Bell Aliant GP are summarized as follows:

(In millions of dollars) (unaudited)	Q1 2013	Q1 2012	Change
Operating Revenue	$684	$682	0.3%
EBITDA ^(1)	324	325	(0.5%)
Capital Expenditures	128	137	(6.2%)
Free Cash Flow ^(1)	95	80	18.5%

^(1)	EBITDA, free cash flow and adjusted earnings per share are non-IFRS financial measures. Refer to the "Non-IFRS financial measures" section of Bell Aliant GP's Q1 2013 Management's Discussion and Analysis (MD&A) for details.

Operating revenues of $684 million in the first quarter of 2013 grew by $2 million (0.3 per cent) from the same quarter in 2012. Growth in TV, Internet, wireless, and other revenues offset declines in local and long distance revenues.

Excluding the effects of a retroactive regulatory adjustment in the first quarter of 2013, operating expenses in the first quarter of 2013 were flat to the same quarter in 2012. TV content and customer support cost pressures from a growing FibreOP customer base were offset by expense reductions throughout the business, largely driven by productivity savings.

EBITDA in the first quarter of 2013 included a $4 million largely retroactive charge arising from a CRTC decision affecting wholesale Internet rates. EBITDA declined by 0.5 per cent in the first quarter of 2013 compared to the same quarter in 2012.

Capital expenditures in the first quarter of 2013 were $128 million, down $9 million (6.2 per cent) from the same quarter a year earlier. Higher FibreOP customer connection costs were more than offset by lower FTTH footprint expansion, reduced central Canada FibreOP startup costs, and lower legacy capital expenditures compared to the first quarter of 2012.

Bell Aliant passed an additional 23,000 premises with FTTH in the first quarter of 2013, compared to 58,000 incremental premises in the first quarter of 2012. Total FTTH coverage reached more than 679,000 premises at the end of March 2013. Approximately 5,000 more customer premises were connected to Bell Aliant's FTTH network in the first quarter of 2013 compared to the same quarter in 2012. FibreOP penetration of premises passed reached 19.6 per cent at the end of March 2013.

Free cash flow was $95 million in the first quarter of 2013, up $15 million (18.5 per cent) from the same quarter a year earlier. The increase was primarily a result of lower capital expenditures, lower restructuring payments, and higher cash from other operating activities compared to the first quarter of 2012.

Revenue details
Total data revenue including Internet and TV increased $19 million (8.0 per cent) in the first quarter of 2013 compared to the same period in 2012.

Internet revenue increased $8 million (6.4 per cent) with residential high-speed average revenue per customer (ARPC) in the first quarter of 2013, up 6.0 per cent from the same quarter a year earlier. The ARPC increase was a result of selected pricing action and customer demand for higher bandwidth bundles and other services. Growth in high-speed Internet customers of 2.8 per cent from a year earlier also contributed to Internet revenue growth. FibreOP Internet customers grew by 17,900, bringing total FibreOP Internet customers to 130,100 at the end of March 2013. FibreOP Internet additions include existing Bell Aliant customers migrating from DSL and fibre-to-the-node (FTTN) networks to the upgraded service. These migrations do not contribute to overall high-speed customer growth but increasingly contribute to improved customer retention and growth in overall customer ARPC. Overall net high-speed Internet customer additions were 8,700 in the first quarter of 2013, up from 6,400 in the same quarter of 2012, bringing total high-speed Internet customers to 927,100 at the end of March 2013.

IPTV revenue grew $11 million in the first quarter of 2013 compared to the first quarter of 2012 with total IPTV customers of 137,300 at the end of March 2013. FibreOP TV customers grew by 15,600 in the quarter to reach 112,500, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall net IPTV customer additions were 14,300 in the first quarter of 2013, compared to 7,900 a year earlier.

Local service and long distance revenues declined $14 million (4.9 per cent) and $9 million (10.0 per cent), respectively, in the first quarter of 2013 compared to the same quarter in 2012, driven by NAS declines of 5.2 per cent. Residential net NAS declines of 26,200 in the first quarter of 2013 were on par with the same quarter in 2012. Improved residential customer activations, winbacks and retention in FibreOP markets, and expansion into new markets helped to mitigate declines arising from intense competitive activity throughout our markets. Business net NAS declines of 5,900 improved by 2,700 from the same quarter a year earlier, mainly as a result of expansion into new markets.

Wireless revenues were up $2 million (6.1 per cent) in the first quarter of 2013 compared to the same quarter in 2012, driven by 4.2 per cent customer growth and 1.4 per cent wireless ARPC growth compared to a year ago.

Other revenues were up $4 million (11.1 per cent) in the first quarter of 2013 compared to the same quarter in 2012, mainly as a result of higher pole attachment fees and custom work.

Declared Dividends

Bell Aliant declared a quarterly dividend of $0.475 per common share, payable on June 28, 2013, to shareholders of record at the close of business on June 14, 2013.

Bell Aliant Preferred Equity Inc. declared a dividend on its Series A Preferred Shares of $0.303125 per share and a dividend on its Series C Preferred Shares of $0.284375 per share, each to be paid on June 28, 2013, to shareholders of record at the close of business on June 14, 2013.

Bell Aliant Preferred Equity Inc. also declared the first dividend on its Series E Preferred Shares of $0.3959 per share to be paid on June 28, 2013, to shareholders of record at the close of business on June 14, 2013. The initial dividend covers the period from February 15, 2013, to June 30, 2013. Future Series E preferred dividends are expected to be $0.265625 quarterly or $1.0625 annually, until the end of the initial rate reset period on September 30, 2018.

Unless otherwise stated, dividends paid by Bell Aliant and Bell Aliant Preferred Equity Inc. to Canadian residents are "eligible dividends" as defined by the Canadian Income Tax Act and corresponding provincial legislation.

Additional Information

More information on Bell Aliant's and Bell Aliant GP's first quarter 2013 can be found in Bell Aliant's first quarter 2013 supplementary information package and Bell Aliant Inc. and Bell Aliant GP's first quarter 2013 MD&As, available at www.bellaliant.ca/investors and on SEDAR at www.sedar.com.

Analyst conference call

A conference call with the financial community is scheduled for May 1, 2013, at 4:30 p.m. (Eastern). The dial-in numbers are 866-226-1792 and 416-340-2216 for Toronto area participants. Media are invited to attend in listen-only mode. A replay of the session can be heard until June 1, 2013. To access the replay, dial 800-408-3053 or 905-694-9451 and enter the passcode 3266319#.

A live audio webcast of the conference call can be accessed on www.bellaliant.ca under the Investor Relations section. A replay of the conference call will be available on the website for one year.

Notes

The information contained in this news release is unaudited.

(1)	Bell Aliant derives virtually all of its income from its ownership in Bell Aliant GP. Bell Aliant GP's results consolidate the results of Bell Aliant Regional Communications, Limited Partnership, Télébec, Limited Partnership, NorthernTel, Limited Partnership, and Bell Aliant Preferred Equity Inc.
(2)	Percentage changes quoted in this release related to dollar values are based on amounts rounded to the nearest hundred-thousand, consistent with disclosure in Bell Aliant's supplementary information package and Bell Aliant GP's MD&A for the first quarter of 2013. Dollar values quoted in this release are rounded to the nearest million unless otherwise stated. Customer metrics are rounded to the nearest hundred unless otherwise stated.
(3)	Definitions of non-IFRS measures:
	a.	EBITDA: Bell Aliant defines EBITDA as operating revenue less operating expenses before interest, income taxes, depreciation and amortization expense, and severance and other charges.
	b.	Free cash flow: Bell Aliant defines free cash flow as cash generated from operating activities less capital expenditures. Free cash flow includes the operations of Bell Aliant and Bell Aliant GP on a combined basis.
	c.	Adjusted earnings per share: Bell Aliant defines adjusted earnings per share as fully diluted earnings per share of Bell Aliant Inc. adjusted for the per share effect of purchase price allocation amortization (PPA) net of income taxes.

For a reconciliation of these non-IFRS financial measures to the most closely comparable IFRS financial measures, please refer to Bell Aliant GP's MD&A for the first quarter of 2013 available at www.bellaliant.ca/investors and www.sedar.com.

Forward-looking Information
This news release contains forward-looking statements concerning anticipated future events, results, circumstances or expectations, in particular statements concerning revenue and EBITDA growth, FTTH expansion plans, and future preferred dividend payments. Unless otherwise indicated, such forward-looking statements describe management's expectations at May 1, 2013. These statements are based on management's beliefs regarding future events, many of which, by their nature are inherently uncertain and beyond management's control. These statements are not guarantees of future performance and are subject to assumptions which may prove to be inaccurate and numerous risks and uncertainties which are difficult to predict.

Bell Aliant encourages investors to review the risk factors section below, and related disclosures, for a discussion of the various factors that could cause actual results to differ from what is currently expected.

Risk Factors
There are many factors that could cause results or events to differ materially from current expectations. The most significant factors that Bell Aliant has identified that may affect Bell Aliant's results or events in 2013 include but are not limited to: increasing competition; cost management; financing and free cash flow; network evolution; pension valuation and investment risk; legislative and regulatory factors; outsourcing and vendor relationships; information technology (IT); human capital; as well as the structural subordination of our common shares; limitations on non-resident ownership; dilution, unpredictability and volatility of our share price; and tax related risks. Some of these risk factors are largely beyond Bell Aliant's control. For additional information on material factors and assumptions used to develop forward-looking information and risk factors that could cause actual results to differ materially from forward-looking information, see also the "Risks that could affect our business results" section of Bell Aliant Inc.'s MD&A for the year ended December 31, 2012, and the "Assumptions made in the preparation of forward-looking information" and "Risks that could affect our business and results" sections of Bell Aliant Regional Communications Inc.'s MD&A for the year ended December 31, 2012, as updated by their 2013 first quarter MD&As, as well as the "Risk Factors" sections of Bell Aliant Inc.'s and Bell Aliant Regional Communication Inc.'s 2012 Annual Information Forms. These documents are available at www.bellaliant.ca/investors and www.sedar.com.

Should any risk factor affect Bell Aliant in an unexpected manner, or should assumptions underlying the forward-looking statements prove incorrect, the actual results or events may differ materially from the results or events predicted. Unless otherwise indicated, forward-looking information does not take into account the effect that transactions, or non-recurring or other special items, announced or occurring after this information is provided may have on the business. All of the forward-looking information reflected in this press release and the documents referred to within it are qualified by these cautionary statements. There can be no assurance that the results or developments anticipated by Bell Aliant will be realized or, even if substantially realized, that they will have the expected consequences for Bell Aliant.

Except as may be required by Canadian securities laws, Bell Aliant disclaims any intention and assumes no obligation to update or revise any forward-looking information, even if new information becomes available, as a result of future events or for any other reason. Readers should not place undue reliance on any forward-looking information. Forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to fiscal 2013 or other future periods. Readers are cautioned that such information may not be appropriate for other purposes.

About Bell Aliant
Bell Aliant (TSX: BA) is one of North America's largest regional communications providers and the first company in Canada to cover an entire city with FTTH technology with its FibreOP services. Through its operating entities it serves customers in six Canadian provinces with innovative information, communication and technology services including voice, data, Internet, video and value-added business solutions. Bell Aliant's employees deliver the highest quality customer service, choice and convenience.

SOURCE: BELL ALIANT INC.

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