Interest apayments showdown:
Bell's large debt has been a focus of discussion and paying that debt down has been a major talking point. The debt has been signalled as Bell's most talked about weakness. I thought to shed a little math on the comparison of the telco's debt impact in the form of interest relative to earnings. Surprisingly I found Bell had the lowest impact of interest to earnings when compared to the other telcos.
Bell vs the other telcos if we take the EBITDA year over year growth we see Rogers performed the best primarily due to the cost cutting from the Shaw synergies followed by Bell then Telus. Bell should look to get to Rogers margin and rather reduce opex….
EBITDA
BCE $2722 up 2.1% from 2667
Rci $2545 up 6% from 2411 ( bell is 1.1062 bigger)
Telus $1842 up 1.3% from 1820 ( bell is 1.4654 bigger)
Quebecor $594.1 down 4.9% from 624.4 (bell is 4.5824 bigger)
I divided the Bell ebitda by the other telco Ebitda above to baseline the earnings multiple between the telcos. Then below I factored in the telco interest payments and again divided the after interest earnings of Bell by the other telcos and what you see is for each telco (other than Quebecor) has more negative impact. This means relative to earnings bells interest payment is smaller than the other telcos. Hence relative to earnings Bells debt impact is smaller. Ie Bell has the best debt profile of the 4 telcos…
BCE 440m interest 2722-440=2282
Rci 593m interest 2545 - 568 = 1977 (bell is 1.1543 bigger)
Telus 351m interest 1842-351 = 1491 (bell is 1.5305 bigger)
Quebecor 92m interest 594.1 - 92 = 502.1 (bell is 4.5549 bigger)
ebitda/debt
bce 2722/440 = 6.1863
rogers 2545/568 = 4.4806
telus 1842/351= 5.2478
quebecor 594/92=6.4565
only Quebecor had a better ratio...