RE:Patrick HoranRBC seems to see things a bit differently than Patrick Horan.
Sector Perform TSX: BCE; CAD 46.03; NYSE: BCE Price Target CAD 57.00
March 31, 2024
BCE Inc. Company description
BCE is Canada’s largest telecom services company and one of the country’s largest corporations. BCE provides local, long distance, wireless, satellite, television, and Internet services across Canada. BCE has a 100% stake in Bell Media, Canada’s largest integrated media company.
Investment summary
We believe BCE is well equipped to navigate a slower revenue environment leaning on a scale advantage, continued FTTH investment and Internet market share gains, the realization of cost efficiencies, and an extensive array of tactical initiatives across wireless, wireline and media. We believe underlying FCF in the current growth environment should continue to support low-single digit dividend growth underpinned by ongoing structural cost efficiencies and what is likely a permanent stepdown in capex following three years of elevated FTTH investment. While we see more attractive growth and valuation set-ups elsewhere in the sector at the moment, we continue to view BCE as a higher-quality core holding that is well positioned to benefit from network convergence and long-term growth in 5G B2B (IoT, MEC, private network, cloud, security).
Potential catalysts for the stock
• Increased visibility on wireless competition
• Acceleration in wireline data growth driven by Internet penetration and improved business market conditions
• Greater-than-expected cost efficiencies
• A greater-than-expected revenue contribution from 5G
• A decline in bond yields