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BCE Bounces Back Significantly in Q3 After Tougher Q2, but Pandemic Will Be a Continuing Headwind

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

BCE bounced back strongly from a second quarter that was severely depressed from COVID-19 lockdowns, with revenue and EBITDA both exceeding our estimates. Strong showings in wireless and a significant recovery in media were the primary factors in the outperformance. We expect the pandemic to continue to weigh on results for its duration, but in our view, BCE is well positioned long term and the stock is attractive relative to our CAD 65 fair value estimate.

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Company Profile

Business Description

BCE is both a wireless and Internet service provider, offering wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with its nearly 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 2019, the wireline segment accounted for just over half of total EBITDA, while wireless composed 38%, and media provided the remainder.

1 Carrefour Alexander-Graham-Bell, Building A, 7th Floor
Verdun, QC, H3E 3B3, Canada
T +1 514 870-8777
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 52,000