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BCE Inc BCE

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Stock XNYS Rating as of
$40.61 −0.15 (0.37%)
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BCE: Firm Will Successfully Navigate Requirement to Offer Wholesale Access to Its Fiber Network

Matthew Dolgin

The Canada Radio-television and Telecommunications Commission announced an initial decision requiring telecom companies to allow resellers access to fiber networks in much of Ontario and Quebec. A review is ongoing, and although we expect mandatory fiber wholesaling to survive the final decision, we expect specifics to evolve. BCE is the only telecom firm materially impacted in Ontario and Quebec. BCE immediately announced that it would reduce fiber capital spending by $1 billion over the next two years. After considering the various ramifications of the CRTC’s decision, we are not changing our CAD 65 fair value estimate.

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Price vs Fair Value

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BCE is trading at a 14% discount.
Price
$40.61
Fair Value
$15.00
Uncertainty
Low
1-Star Price
$91.67
5-Star Price
$48.80
Economic Moat
Mnsftb
Capital Allocation
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Bulls Say, Bears Say

Bulls

The immense network improvement resulting from BCE's fiber-to-the-home buildout will lead to further wireline share gains and margin improvement.

Bears

A combined Quebecor and Freedom Mobile should make for a strong fourth national wireless competitor, and it will likely undercut the Big Three on price, limiting pricing power and pressuring margins.

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Trading Information

Previous Close Price
$40.76
Day Range
$40.55–40.85
52-Week Range
$36.15–48.38
Bid/Ask
$40.00 / $41.64
Market Cap
$37.05 Bil
Volume/Avg
1.3 Mil / 1.8 Mil

Key Statistics

Price/Earnings (Normalized)
17.36
Price/Sales
2.03
Dividend Yield
7.59%
Dividend Yield (Forward)
6.89%
Total Yield
7.59%

Company Profile

BCE provides wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with its roughly 10 million customers constituting about 30% of the market. It is also the ILEC (incumbent local exchange carrier—the legacy telephone provider) throughout much of the eastern half of Canada, including in the most populous Canadian provinces: Ontario and Quebec. Additionally, BCE has a media segment, which holds television, radio, and digital media assets. BCE licenses the Canadian rights to movie channels including HBO, Showtime, and Starz. In 2022, the wireline segment made up 52% of total EBITDA, while wireless was 31% and media provided the remainder.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
44,610
Website
https://www.bce.ca

Competitors

Valuation

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Metric
BCE
QBR.B
RCI
Price/Earnings (Normalized)
 17.3610.8013.52
Price/Book Value
 2.924.262.98
Price/Sales
 2.031.401.75
Price/Cash Flow
 6.304.725.84
Price/Earnings
BCE
QBR.B
RCI

Financial Strength

Metric
BCE
QBR.B
RCI
Quick Ratio
 0.410.490.72
Current Ratio
 0.570.810.90
Interest Coverage
 3.403.301.66
Quick Ratio
BCE
QBR.B
RCI

Profitability

Metric
BCE
QBR.B
RCI
Return on Assets (Normalized)
 4.15%6.01%3.78%
Return on Equity (Normalized)
 16.10%46.54%22.13%
Return on Invested Capital (Normalized)
 6.85%10.66%6.57%
Return on Assets
BCE
QBR.B
RCI

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T
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