BCE Inc T.BCE

Alternate Symbol(s): T.BCE.P.G | T.BCE.P.T | T.BCE.P.H | T.BCE.P.Y | BECEF | T.BCE.P.I | T.BCE.P.Z | BCE | T.BCE.P.J | BCEFF | T.BCE.P.K | BCEIF | T.BCE.P.A | T.BCE.P.L | T.BCE.P.B | T.BCE.P.M | T.BCE.P.C | T.BCE.P.N | BCEPF | T.BCE.P.D | T.BCE.P.Q | BCEXF | T.BCE.P.E | T.BCE.P.R | T.BCE.P.F | BCPPF | T.BCE.P.S

Communication Services Telecom Services

BCE Inc. is a Canada-based communications company. The Company provides wireless and fiber networks. The Company operates through one segment: Bell Communication and Technology Services (Bell CTS). Bell CTS segment provides a range of communication products and services to consumers, businesses and government customers across Canada. Its wireless products and services include mobile data and voice plans and devices and are available nationally. Its wireline products and services comprise data (including Internet access, Internet protocol television (IPTV), cloud-based services and business solutions), voice, and other communication services and products, which are available to its residential, small and medium-sized businesses and large enterprises customers primarily in Ontario, Quebec, the Atlantic provinces and Manitoba. This segment includes its wholesale business, which buys and sells local telephone, long-distance, data, and other services from or to resellers and other carriers.

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BCE Inc > Nope - Not a Dividend Cut

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Comment by incomedreamer11on Jan 03, 2024 10:26am

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Post# 35808605

RE:RE:Nope - Not a Dividend Cut

From TD ( expecting dividend increase)

Event

We have tweaked our estimates and target price (see today's telco preview note for more details: LINK). With lower bond-yield forecasts, our BCE target price has increased, which, combined with recent weakness, has pushed us back to BUY.

Impact: POSITIVE

We believe Q4/23 results expected in February will show that BCE is doing a good job managing opex and capex, while striking a healthy balance between volume and ARPU growth in wireless. We are not pleased with industry pricing discipline in wireline/Internet (we have lowered our estimates and target multiples today for wireline/cable segments at Rogers, BCE, and TELUS), but:

1. We hope to see wireline price increases implemented and sustained by both Rogers and Bell in early 2024, so that ARPU and revenue growth trends can improve by H2/24.

2. Wireless growth remains strong enough (mostly volume-driven) to drive respectable consolidated EBITDA growth in Q4/23E and FY2024E, despite headwinds in wireline.

3. Regardless of the pace of EBITDA growth, we believe declining bond yields should drive a near-term recovery in BCE shares. With the stock down more than peers (except CCA) in the final four months of 2023 (Exhibit 1), the dividend yield is now up to 7.2%, which is excessive relative to GoC 10-year yields (dividend versus bond spread is shown in Exhibit 2).

TD Investment Conclusion

We are upgrading BCE to BUY from Hold. We expect a dividend increase with Q4/23 results on February 8. Some investors fear that growth could decelerate to 3% from 5%, but even at 3%, the prospective yield would be 7.4% at the current share price (7.6% if they bump 5%). Simply too high for the fibre, spectrum, and other long-life infrastructure assets within BCE, and notably higher than both AT&T and Verizon. On our FCF definition, the payout ratio will be over 100% in 2024 with either a 3% or 5% dividend increase, but the amount of borrowing required to fund the delta is trivial, in our view. We estimate $242mm in debt to fund 5% dividend growth and $171mm to fund 3%, which are both rounding error on total debt/prefs of ~$38 billion.

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