Bell Aliant reports third quarter 2014 results

• Operating revenues grow $3 million driven by Internet and TV growth
• FibreOP^TM Internet adds 19,000 customers to reach 236,000
• FibreOP TV adds 14,300 customers to reach 200,000
• Fibre-to-the-home (FTTH) now passes 961,000 premises
• BCE privatization of Bell Aliant expected to close on or about October 31, 2014

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, Oct. 30, 2014 /CNW/ - Bell Aliant Inc. (TSX: BA) today reported financial results for the third quarter of 2014 for Bell Aliant Inc. (Bell Aliant) and Bell Aliant Regional Communications Inc. (Bell Aliant GP).

"Our third quarter results continued to demonstrate our commitment to solid execution," said Karen Sheriff, president and chief executive officer, Bell Aliant.  "I am extremely proud of our team's performance and the strong position we have put Bell Aliant in as we deliver even more value to our customers by combining our product and service strength, and cost management skills, with the world class communications networks and operations of Bell."

BCE's Privatization of Bell Aliant

On July 23, 2014, BCE Inc. (BCE) and Bell Aliant Inc. announced that BCE had agreed to make an offer to acquire all of the issued and outstanding Bell Aliant Inc. common shares that it did not already own (Privatization) through a common share tender offer (Common Share Offer) for total consideration of approximately $3.95 billion. Concurrent with the Common Share Offer launched on August 14, 2014, BCE also offered to exchange all of the issued and outstanding preferred shares of Bell Aliant Preferred Equity Inc. (Prefco) for newly issued preferred shares of BCE, with the same financial terms as the existing Prefco preferred shares (Preferred Share Offer). On September 22, 2014, BCE and Bell Aliant Inc. announced the successful completion of the initial phase of the Common Share Offer and of the Preferred Share Offer. On October 3, 2014, BCE and Bell Aliant Inc. announced the take up by BCE of more than 90 per cent of Bell Aliant Inc.'s publicly held common shares under the Common Share Offer.

On October 15, 2014, BCE commenced a compulsory acquisition of the remaining Bell Aliant Inc. common shares that were not tendered under the Common Share Offer which will complete the Privatization on or about October 31, 2014. A meeting of the Prefco preferred shareholders will be held on October 31, 2014, to approve a subsequent acquisition transaction for BCE to acquire the remaining Prefco preferred shares that were not exchanged under the Preferred Share Offer.

On October 20, 2014, Bell Canada and Bell Aliant Inc. announced that Bell Aliant Regional Communications, Limited Partnership (Bell Aliant LP) would mail an information circular and related proxy materials to the holders (Bell Aliant Noteholders) of Medium Term Notes and Floating Rate Medium Term Notes of Bell Aliant LP in connection with (i) a meeting of the Bell Aliant Noteholders, voting as a single class and (ii) separate meetings of the holders of each series of Bell Aliant Notes, each voting separately as a series to consider and, if deemed appropriate, approve the exchange of Bell Aliant Notes for newly issued debentures of Bell Canada (Bell Canada Debentures). The Bell Canada Debentures will have financial terms that are the same as those attached to the applicable series of Bell Aliant Notes. The meetings are expected to be held on November 14, 2014, in Montreal, Quebec.

As a result of the Privatization, the regular quarterly dividends for the third and fourth quarters of 2014 that would have been declared on Bell Aliant common shares will not be declared.

In addition, as a result of the Privatization, Bell Aliant is withdrawing its previously issued 2014 financial guidance.

Third Quarter 2014 Highlights¹

Bell Aliant Inc. reported net earnings of $59 million in the third quarter of 2014, down $22 million from the same quarter in 2013, driven by an increase in financial advisory, professional and consulting fees, and other costs associated with the Privatization transactions.  Earnings per share and adjusted earnings per share for the third quarter of 2014 were $0.26 and $0.44 respectively, compared to $0.35 and $0.42 in the third quarter of 2013.

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

(In millions of dollars) (unaudited)	Q3 2014	Q3 2013	Change	YTD 2014	YTD 2013	Change
Operating Revenue	$698	$695	0.5%	2,057	2,070	(0.7%)
Adjusted EBITDA ^(1)	323	327	(1.2%)	958	978	(2.0%)
Capital Expenditures	150	138	8.6%	431	423	1.8%
Free Cash Flow ^(1)	121	145	(16.3%)	226^(2)	393	(42.5%)

⁽¹⁾ Adjusted EBITDA, free cash flow and adjusted earnings per share are non-IFRS measures. Refer to the "Non-IFRS financial measures" section of Bell Aliant GP's Q3 2014 Management's Discussion and Analysis (MD&A) for details.
⁽²⁾ Free cash flow in 2014 included a one-time catch-up income tax payment of approximately $65 million in the first quarter of 2014 related to the elimination under applicable tax laws of the ability to defer partnership income.

Operating revenues in the third quarter of 2014 were $698 million, up $3 million (0.5 per cent) from the same quarter in 2013. Growth in Internet, TV, other data, and wireless revenues was partially offset by declines in local, long distance, and other revenues. Operating expenses in the third quarter of 2014 increased $7 million from the same quarter in 2013, driven by growth in promotional and TV content costs from a growing FibreOP customer base and storm-related costs, which were partially offset by savings from productivity initiatives. As a result, adjusted EBITDA declined 1.2 per cent in the third quarter of 2014 compared to the same quarter in 2013.

Capital expenditures in the third quarter of 2014 were $150 million, up $12 million (8.6 per cent) from the same quarter a year earlier. The increase was driven by higher FTTH footprint expansion in the third quarter of 2014 compared to the same quarter in 2013.  FTTH now passes 961,000 premises in Bell Aliant's territories.

Free cash flow in the third quarter of 2014 was $121 million, down $24 million from the same quarter in 2013, primarily as result of higher cash income taxes and capital expenditures which were somewhat offset by a higher positive contribution to cash from changes in working capital.

Revenue details

Internet revenue increased $12 million (8.8 per cent) driven by growth in high-speed Internet customers of 4.9 per cent and growth in residential high-speed average revenue per customer (ARPC) of 6.7 per cent from the same quarter in 2013.  FibreOP Internet customers grew by 19,000 during the quarter, bringing total FibreOP Internet customers to approximately 236,000 at the end of September 2014. 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 average revenue per customer. Overall high-speed Internet customer net additions were 14,700 in the third quarter of 2014, up from 11,600 in the same quarter of 2013, bringing total high-speed Internet customers to 991,700 at the end of September 2014.

IPTV revenue grew $12 million (35.9 per cent) in the third quarter of 2014 compared to the same quarter in 2013, with total IPTV customers of 215,300, up 31.9 per cent from a year earlier. FibreOP TV customers grew by 14,300 in the third quarter to reach approximately 200,000, a portion of which were migrations from Bell Aliant's FTTN TV service. Overall net IPTV customer additions were 12,900 in the third quarter of 2014, compared to 14,500 a year earlier.

Other data revenues increased $4 million (4.0 per cent) in the third quarter of 2014 compared to the same quarter in 2013, primarily as a result of higher data product sales.

Local service and long distance revenues declined $11 million (4.0 per cent) and $8 million (10.6 per cent), respectively, in the third quarter of 2014 compared to the same quarter in 2013, driven largely by NAS declines of 5.4 per cent. Net NAS declines were essentially flat to the same quarter in 2013.

Wireless revenues increased 1.7 per cent in the third quarter of 2014 compared to the third quarter in 2013. Overall wireless customers were up 1.3 per cent at the end of September 2014 from a year earlier, with growth in postpaid wireless customers of 3.3 per cent offset by declines in prepaid wireless customers, reflecting industry trends.  Wireless ARPC increased 0.5 per cent compared to the same quarter in 2013 driven by higher smartphone penetration.

Other revenues were down $6 million (14.1 per cent) in the third quarter of 2014 compared to the same quarter in 2013, due to lower revenues from a contact centre subsidiary that ceased operations in late 2013, lower product sales and a decrease in the volume of custom work.

Additional Information

More information on Bell Aliant's and Bell Aliant GP's third quarter 2014 results can be found in Bell Aliant's third quarter 2014 supplementary financial information package and Bell Aliant and Bell Aliant GP's third quarter 2014 MD&As, available at www.bellaliant.ca/investors and on SEDAR at www.sedar.com.

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 LP; Télébec, Limited Partnership; NorthernTel, Limited Partnership; and Prefco.
(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 third quarter of 2014. 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.	Adjusted EBITDA: Bell Aliant defines adjusted EBITDA as net earnings before finance costs, other expense, income tax expense, depreciation and amortization, and severance and other charges.
	b.	Free cash flow: Bell Aliant defines free cash flow as cash from operating activities less capital expenditures. Free cash flow includes the cash performance of Bell Aliant and Bell Aliant GP on a combined basis.
	c.	Adjusted earnings per share (EPS): Bell Aliant defines adjusted EPS as diluted EPS of Bell Aliant Inc. adjusted for the per share after-tax effect of purchase price allocation amortization, severance and other charges, and debt redemption loss, recorded by Bell Aliant GP.

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 third quarter of 2014 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 the Privatization of Bell Aliant by BCE. Unless otherwise indicated, such forward-looking statements describe management's expectations at October 30, 2014. 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.

Risk Factors

There are many factors that could cause actual 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 to differ materially from expectations include but are not limited to: consummation of the privatization; 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; 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 and results" section of Bell Aliant's MD&A for the year ended December 31, 2013, and the "2014 outlook and assumptions" and "Risks that could affect our business and results" sections of Bell Aliant GP's MD&A for the year ended December 31, 2013, as updated by their 2014 quarterly MD&As, as well as the "Risk Factors" sections of Bell Aliant's and Bell Aliant GP's 2013 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 2014 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 fibre-to-the-home (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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