“It’s been a highly competitive environment, with the lowest pricing we’ve ever seen,” BCE CEO Mirko Bibic said in an interview.EDUARDO LIMA/The Globe and Mail
BCE Inc. posted higher net earnings in the fourth quarter of 2024, but added fewer wireless subscribers than expected, and it forecast a drop in earnings per share this year.
The company said it expects 2025 revenue in the range of a 1-per-cent increase to a 3-per-cent decline. It forecast a decline in adjusted earnings per share of 8 to 13 per cent.
“The wide range is designed to accommodate for macroeconomic pressures and competitive pressures that we’ve seen on pricing over the last 18 to 24 months,” said chief executive officer Mirko Bibic in an interview Thursday morning.
The company cited continuing competitive wireless and broadband pressure, lower subscriber loading, higher media costs, increased interest expense and a larger number of common shares outstanding due to the implementation of a discounted dividend reinvestment plan.
This was offset by lower planned capital expenditures resulting from a slowdown in BCE’s fibre build, and certain efficiencies that it said would drive growth in free cash flow of 11 to 19 per cent.
In its fourth quarter ended Dec. 31, the telco added 56,550 net new postpaid wireless customers, down 56 per cent from 128,715 customers added in 2023. Analysts had expected the company to add 64,000.
“It’s been a highly competitive environment, with the lowest pricing we’ve ever seen,” Mr. Bibic said. Slowing immigration to Canada and fewer housing starts have also been headwinds for the industry, he added.
The company’s guidance on Thursday includes maintaining its dividend payout of $3.99 per share for 2025, despite some analysts arguing in recent months that reducing it would strengthen BCE’s long-term financial position, even with the possible risk of initial investor backlash.
When the company paused the dividend last November, it said it intended to maintain the dividend until BCE’s payout and net debt leverage ratios were tracking toward its target policy ranges, subject to annual review by its board of directors.
In a slight departure from that message, Mr. Bibic told analysts Thursday morning that the company would continue to reassess the dividend based on macroeconomic, competitive and regulatory factors.
Some analysts took this as a sign that a dividend cut could be possible in the coming quarters. The high-yielding stock, which is widely held by retail investors, has in recent quarters paid out more in dividends than the company has earned in free cash flow. BCE’s dividend yield has recently stood at about 11 per cent, an uncommonly high level that suggests many investors see the payout as unsustainable.
“We would not rule out a cut later in 2025 given the uncomfortable payout situation and accelerated spending in the U.S.,” Desjardins analyst Jerome Dubreuil wrote in a note to investors.
The company currently carries a high debt load of more than $40.5-billion. In order to help pay that down, Mr. Bibic said BCE had identified an added $1.3-billion of non-core assets that could be sold to help strengthen the balance sheet, aside from the company’s continuing sales of Northwestel Inc. for $1.3-billion and its stake in Maple Leaf Sports & Entertainment Ltd. for $4.7-billion.
BCE has also retained financial advisers to help assess potential sales of its telecom infrastructure, which has “a significant amount of untapped value,” Mr. Bibic said. Analysts have estimated these assets could be worth billions.
Mr. Bibic told analysts said the company would review opportunities to grow its U.S. fibre footprint past BCE’s pending acquisition of Ziply Fiber, but only if BCE could bring in third-party capital to reduce its funding requirements.
“We have received a number of inbound calls asking us if we’d be interested in doing that,” he said.
However, he took aim at the federal telecom regulator for its decision, so far, to allow Telus Corp. to resell internet over the networks of Bell Canada, which BCE owns. Mr. Bibic said that the Canadian Radio-television and Telecommunications Commission’s policy disincentivizes investment and would lead to job losses and less construction of critical infrastructure.
Last year, Bell said it would reduce its network building spend by $1-billion as a result of the regulator’s decision. Mr. Bibic said on Thursday that Bell plans to make further cuts this year should the regulator not change its policy when it revisits the decision this summer.
“We’re not in the business of building fibre for Telus’s benefit, and that’s what the CRTC policy that’s in place right now forces us to do,” he told analysts.
BCE added 34,187 internet customers in its fourth quarter, down 39 per cent compared to the same quarter in 2023. Analysts had expected the company to add 40,000. Internet revenues grew 3.4 per cent. Pricing, Mr. Bibic said, would remain the main lever in growing that revenue over the long term.
The company collected $6.42-billion in revenue, down 0.8 per cent from $6.47-billion a year earlier.
BCE had $505-million of profit, up 16 per cent from $435-million during the same quarter in 2023, amounting to 51 cents per share, up from 42 cents per share.
Churn – the monthly rate of customer turnover – among BCE’s postpaid wireless customers increased to 1.66 per cent during the quarter, compared with 1.63 per cent in the same quarter year earlier.
The company posted 1.2 per cent higher media revenue, with a greater proportion of that revenue from digital rather than its traditional linear television and radio modes.
BCE shares closed at $33.70 Thursday on the Toronto Stock Exchange, down 6.1 per cent.