Bce Inc ((TSE:BCE)) has held its Q1 earnings call. Read on for the main highlights of the call.
BCE Inc’s recent earnings call painted a mixed picture of optimism and caution. While the company is making strides in strategic partnerships and digital media growth, it faces significant challenges, including a notable dividend cut and revenue declines in certain segments. The focus remains on deleveraging and enhancing growth amidst competitive pressures in the wireless sector.
Major Partnership with PSP Investments
BCE Inc announced a strategic partnership with PSP Investments, aimed at funding the expansion of their U.S. business. This partnership could bring in commitments exceeding $1.5 billion, effectively de-risking future funding needs and supporting the company’s U.S. Fiber growth strategy.
U.S. Fiber Expansion and Ziply Acquisition
The company is set to expand its U.S. Fiber footprint significantly, targeting up to 8 million locations with the acquisition of Ziply. This acquisition is expected to close in the second half of 2025, with Ziply’s EBITDA having grown by 17% in 2024.
Transformation Program Upsized
BCE has increased its cost-saving target from $1 billion to $1.5 billion by 2028, building on the $500 million in savings already achieved since 2022. This move underscores the company’s commitment to operational efficiency.
Digital Media Growth
Bell Media, a subsidiary of BCE, reported a 12% increase in digital revenues, driven by a 22% rise in Crave subscribers to 3.8 million. Media EBITDA saw a substantial increase of 35.9%, reflecting a notable improvement in margins.
Improved Free Cash Flow
BCE’s free cash flow for Q1 increased by $713 million year-over-year, attributed to lower capital expenditures, reduced cash taxes, and improved working capital.
Dividend Reduction
In a bid to accelerate deleveraging efforts, BCE announced a reduction in the annualized dividend per common share from $3.99 to $1.75. This move is part of the company’s strategy to manage its financial leverage more effectively.
Revenue Decline
The company reported a 1.3% decrease in total revenue, primarily due to a 7.4% decline in low-margin product sales and ongoing declines in legacy services.
Wireless Revenue Challenges
BCE faced challenges in its wireless segment, with service revenue decreasing by 1.8%. This decline was influenced by competitive pricing pressures and reduced roaming due to decreased U.S. travel.
Forward-Looking Guidance
Looking ahead, BCE has set ambitious targets, including a near-term deleveraging goal of 3.5 times adjusted EBITDA by the end of 2027 and a longer-term target of 3.0 times by 2030. The company aims to double its Fiber revenue and enhance shareholder returns while maintaining a strong focus on operational efficiency and cost management.
In conclusion, BCE Inc’s earnings call reflects a company in transition, balancing strategic growth initiatives with the need to address financial challenges. While the sentiment is cautiously optimistic, the road ahead will require careful navigation of competitive pressures and strategic execution.