BCE Inc

We transfer coverage of the Canadian telecom providers: Rogers, BCE, Telus, Quebecor, and Cogeco. These firms account for nearly all of the wireless and wireline services provided in Canada, with all but Cogeco operating national wireless networks, and Rogers and BCE the largest wireline networks.

The bottom line: We lower our fair value estimates for Rogers to CAD 60 from CAD 70, BCE to CAD 40 from CAD 45, Telus to CAD 15 from CAD 20, and Cogeco to CAD 70 from CAD 80. We raise our fair value estimate for Quebecor to CAD 70 from CAD 55. We have lowered our Rogers, BCE, and Telus moat ratings to no-moat from narrow, and maintained our no-moat ratings for Cogeco and Quebecor. Competition in wireless remains elevated, and government-mandated wholesale wireline access has limited pricing growth, making it difficult to achieve attractive returns. We lower our capital allocation ratings for BCE and Telus to Poor from Standard. The firms' balance sheets have become strained, and returns on invested capital have deteriorated due to investments in US expansions and non-telecom businesses, respectively

Long view: Our uncertainty rating for each of our Canadian telecom companies is Medium. The earnings and cash flow generated by these five firms' telecom businesses are relatively stable and recession-proof, but M&A and non-telecom businesses have introduced some uncertainty in recent years. We don't see significant relief on the horizon for wireless competitors until restrictions on Quebecor price increases expire in 2032. We expect Quebecor will then raise prices to earn a sufficient return on its wireless investments. In wireline, we expect growth to be meager as broadband net additions and potential price increases are offset by declining television and wireline phone subscriptions.

Bears say: Slow population growth and reduced immigration have weighed on an already tough wireless industry, and market-wide net additions are unlikely to return to early-2020s peaks.

Our fair value estimate for BCE is USD 29, based on the Aug. 31 exchange rate of CAD 1.39/USD 1. This implies a price/earnings and enterprise value/EBITDA multiples of 7 and 13 times, respectively, based on our 2026 estimates. We assume BCE will deliver meager growth and very modest margin expansion in its telecom segments, averaging 1% annually across our 10-year forecast. While we believe the firm can deliver 3% revenue growth in broadband and wireless service, steep declines in those two segments continue to weigh on consolidated growth. Given competitive pressure in the wireless segment, we expect BCE will slow wireless network capital expenditures and focus on building its handful of data centers and generating free cash flow.

In the wireless business, we believe BCE can maintain its current market share over the next 10 years. We expect the firm to grow its customer base by less than 1% annually, in line with population growth, with blended average revenue per user largely flat over the next decade, under pressure from Quebecor. Net additions will likely be slower more broadly as immigration, which had been a driver of new users, becomes more restrictive. We expect ARPU to recover beyond 2033, when Quebecor is no longer mandated to keep prices low, and as the firm builds out its own owned network and needs to earn a return. Despite pricing pressure, customer churn remains low, likely because only the most price-sensitive consumers are opting for Quebecor over the Big 3, and BCE can bundle wireless and broadband in many areas where Quebecor has no cable footprint.

In broadband, we expect the Ziply acquisition to provide an easy opportunity to add new subscribers, as Canada reaches saturation. We expect the firm to average 90,000 net new additions per year, with roughly half of new additions coming from Ziply fiber customers in the US. We expect IPTV and phone line subscribers to continue declining, putting downward pressure on revenue.

We expect the firmwide adjusted EBITDA margin to remain mostly stable, with an incremental improvement of 1.5 percentage points over 10 years. The firm’s transition away from its legacy copper network to fiber deployments has decreased maintenance and operating costs. We expect any meaningful cost savings to be difficult to maintain, as higher costs elsewhere in the firm and a lack of pricing power partially offset any headway made in reducing costs.

While investment in the Canadian broadband and wireless business is being cut back due to less-than-favorable regulatory decisions, we expect the firm will be unable to reduce capital expenditures as much as Rogers or Telus, as it needs to continue plowing capital into its Ziply fiber network in the US and its handful of data center projects in Canada.

We assign BCE a no-moat rating despite seeing elements of efficient scale and cost advantages. These advantages help protect BCE’s position against smaller telecom competitors, but they have not translated into a sufficiently durable spread between returns on invested capital and the company’s cost of capital in recent years.

Telecom businesses generated approximately 87% of BCE’s segment revenue and 93% of segment adjusted EBITDA in 2025, making its performance overwhelmingly responsible for the company’s consolidated economics. BCE has been unable to retain sufficient economic value due to intense competition, regulation, technological substitution, and the substantial capital required to maintain and expand its networks. While we expect returns to improve once Quebecor is no longer mandated to price its wireless services aggressively in 2033, any unforeseen increase in competition would be enough to hold returns back below BCE’s cost of capital.

Canada’s telecom market remains concentrated, primarily among three established national operators. BCE’s mobile network, extensive fiber infrastructure, and incumbent wireline position in Ontario, Quebec, and Atlantic Canada would be prohibitively expensive for a new competitor to replicate. The need to invest heavily before achieving sufficient subscriber density makes the prospective return from duplicating BCE’s network unattractive. These characteristics of efficient scale discourage unrestricted facilities-based entry to the market.

However, the Canadian telecom regulator, the CRTC, continues to attempt to foster telecom competition at regional and local levels. The CRTC requires large incumbent telephone companies to provide competitors with wholesale access to fiber-to-the-premises networks. Although newly constructed fiber receives a five-year exemption intended to encourage investment, regulated wholesale access ultimately allows competitors to offer service over infrastructure that BCE has financed and constructed. This regulatory structure works around some of the market's natural efficient-scale characteristics and limits BCE’s ability to retain all the economic benefits of its network ownership.

BCE also benefits from a cost advantage because it can spread substantial fixed costs across a large national customer base. Spectrum licenses, radio equipment, fiber and transport infrastructure, network management systems, billing platforms, retail operations, and much of the technical workforce do not increase proportionally with each additional subscriber. BCE ended 2025 with approximately 10.5 million mobile phone customers and 4.5 million Canadian retail high-speed internet subscribers, allowing it to allocate these costs across a significantly larger revenue base than regional operators.

Despite the potential cost advantages, BCE is facing pressure from promotional pricing, wholesale fiber competition, and the decline of legacy services. The company attributed its 2025 service revenue decline to lower legacy voice, data, and television revenue, higher acquisition and retention discounts, and lower wireless revenue per customer. Fiber broadband subscriber additions slowed as competitors rolled out aggressive offers. More broadly, the CRTC reports that Canadian internet prices declined by approximately 6% and mobile service prices by nearly 40% between the beginning of 2021 and 2026.

This suggests that a meaningful portion of the industry’s scale efficiencies and declining unit costs has been passed through to consumers rather than retained as excess returns by network owners. So, while BCE is protected from greenfield entry, comparable scale among the major incumbents, regulatory intervention, aggressive pricing, and continued capital requirements prevent BCE from consistently retaining the value of these advantages.

We do not assign an economic moat to Bell Media. The segment owns a broad collection of Canadian media properties, including the CTV and Noovo television networks, TSN and RDS sports channels, the Crave streaming service, Astral out-of-home advertising assets, and iHeartRadio Canada. These properties provide substantial audience reach and recognizable brands, but they do not create barriers that prevent consumers or advertisers from shifting to competing platforms, especially as cable television continues to decline structurally. As viewing migrates from traditional television and radio to streaming, connected television, and social media platforms, Bell Media must continually invest in content and technology simply to maintain audience engagement.

We would reconsider our no-moat rating if BCE demonstrated a maintained ability to earn returns materially above its cost of capital on its current network, rather than primarily preserving EBITDA through cost reductions. Though this is unlikely given current market dynamics, it may change once Quebecor’s favorable government regulation ceases.

Migrating customers off legacy copper and onto fiber has lowered operating costs and helps reduce churn through better service and increased bundling with wireless.

BCE’s expansion into broader infrastructure, including data centers, could strengthen its enterprise offering and create incremental growth opportunities.

BCE’s content assets, the Crave streaming service, and an exclusivity agreement with HBO allow the firm to monetize both traditional television and streaming service customers.

Quebecor’s national expansion will likely keep wireless pricing competitive, limiting BCE’s ability to grow service revenue.

Regulatory consumer-protection measures will constrain pricing flexibility and pressure profitability across BCE’s wireless and broadband businesses.

BCE will need to invest heavily to support the continued buildout of Ziply’s fiber network and data centers, delaying deleveraging.