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01/11 11:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates a mixed outlook with several negative aspects. The dividend cut and focus on deleveraging are concerning, and while the partnership with PSP and fiber expansion are positive, the lack of updates on asset divestitures and regulatory appeals raises uncertainties. The Q&A reveals some optimism about free cash flow and wireless performance, but the reduced fiber expansion and unclear guidance on certain issues contribute to a negative sentiment. Overall, the strategic adjustments and financial uncertainties are likely to lead to a negative stock price reaction.
Revenue BCE's consolidated revenue increased by 1.3% year-over-year in Q2 2025. This growth was attributed to the successful fiber strategy, premium wireless subscriber acquisition, cross-sell penetration of mobility and Internet households, digital media growth, and enterprise momentum driven by AI-powered technology solutions.
EBITDA EBITDA decreased by 0.9% year-over-year in Q2 2025. The decline was due to higher cost of goods sold associated with significant growth in product revenue.
Net Earnings and Statutory EPS Net earnings and statutory EPS increased year-over-year due to lower asset impairment charges and a noncash loss recorded in Q2 2024 related to a joint venture equity investment.
Adjusted EPS Adjusted EPS decreased by 19.2% year-over-year, reflecting noncash mark-to-market losses on FX hedges and options, higher interest expense, and lower year-over-year tax adjustments.
CapEx Capital expenditures (CapEx) decreased by $215 million year-over-year in Q2 2025, contributing to year-to-date CapEx savings of $488 million. This reduction aligns with the plan to reduce capital spending by approximately $500 million in 2025.
Free Cash Flow Free cash flow increased by 5% year-over-year in Q2 2025, supported by reduced capital expenditures.
Internet Revenue Internet revenue grew by 3% year-over-year in Q2 2025, driven by subscriber growth and disciplined pricing supported by fiber.
Wireless Service Revenue Wireless service revenue declined by 0.3% year-over-year in Q2 2025. The decline was attributed to competitive pricing pressures, partially offset by nonrecurring revenue related to the G7 Summit.
Bell Media Revenue Bell Media revenue increased by approximately 4% year-over-year in Q2 2025. This growth was driven by an 8.1% increase in subscription revenue, strong Crave and sports DTC streaming growth, and contributions from the F1 Canadian Grand Prix and Sphere Abacus acquisition.
Bell Media EBITDA Bell Media EBITDA increased by 7.8% year-over-year in Q2 2025, driven by revenue growth and a 1.1-point increase in margin to 27.9%.
Bell Business Markets Revenue Bell Business Markets (BBM) revenue showed significant year-over-year growth in Q2 2025. This was driven by modest growth in core connectivity and communication services, rapid growth in Ateko managed services and cybersecurity business, and the introduction of Bell AI Fabric.
Self-installed program: Since 2022, more than 1 million self-installs have been performed, with over 90% of new residential customers opting for self-installation. This initiative has improved customer convenience and generated significant cost savings.
AI-powered virtual repair diagnostics tool: Since 2022, this tool has eliminated 1.2 million calls by resolving technical issues without support calls or technician visits.
AI-powered virtual assistant: Rolled out nationally for online chat support, enabling more natural conversations and improving productivity.
Bell AI Fabric: Launched as a backbone for Canada's AI ecosystem, including AI data centers and partnerships with companies like Cohere to provide sovereign AI solutions.
Ateko: Launched in May, specializing in platforms like ServiceNow, Salesforce, AWS, Azure, and Google Cloud, and focusing on verticals such as financial institutions, utilities, public sector, and TMT.
Ziply Fiber acquisition: Completed acquisition of Ziply Fiber, expanding Bell's fiber footprint by 1.4 million locations and positioning Bell as the third-largest fiber Internet provider in North America. This acquisition supports plans to reach 8 million fiber passings in the U.S.
Crave expansion: Crave grew direct streaming subscribers by 72% year-over-year, with new streaming bundle offers including Disney+, Crave, and TSN.
Wireless subscriber growth: Added 94,479 new net mobile phone subscribers in Q2, with postpaid churn improving by 12 basis points to 1.06%.
Fiber customer growth: Added 27,000 new FTTH customers in Canada, contributing to 3% Internet revenue growth.
Bell Business Markets (BBM) growth: Delivered record revenue growth driven by core connectivity, Ateko managed services, cybersecurity, and AI Fabric.
AI and technology leadership: Positioning Bell as a leader in AI-powered technology solutions, cybersecurity, and sovereign AI infrastructure.
Digital media pivot: Investments in digital media, including Crave and Connected TV, have driven a 9% increase in digital revenue, now comprising 43% of total media revenues.
Regulatory Challenges: The federal government's decision to decline altering the CRTC's decision to expand mandatory wholesale access could impact network builders' compensation and investment returns, posing a risk to BCE's financial and operational strategies.
Competitive Pricing Pressure: Sustained competitive pricing pressure in the wireless segment has led to a decline in ARPU and could continue to impact financial performance.
Macroeconomic Headwinds: Near-term macroeconomic challenges may affect advertiser demand in the media segment, potentially impacting revenue and EBITDA growth.
Supply Chain and Cost Pressures: Higher cost of goods sold, driven by increased product revenues, has impacted EBITDA, reflecting potential supply chain or cost management challenges.
Interest and Debt Management: Higher interest expenses and increased leverage ratios due to acquisitions like Ziply Fiber could strain financial flexibility.
Execution Risks in U.S. Fiber Expansion: The acquisition of Ziply Fiber and planned U.S. fiber build-out involve significant capital investment and operational execution risks, particularly in achieving targeted penetration rates and synergies.
Advertising Revenue Decline: Weakness in traditional broadcast TV advertising and divestiture of radio stations have led to a decline in advertising revenue, which could affect overall media segment performance.
Revenue and EBITDA Guidance for 2025: BCE has increased its consolidated revenue and adjusted EBITDA guidance for full year 2025 to a range of 0% to 2%.
Adjusted EPS Guidance for 2025: Adjusted EPS guidance for 2025 has been revised to a range of minus 13% to minus 10%, reflecting higher depreciation, amortization, and increased interest expense assumptions related to the Ziply Fiber acquisition.
Capital Intensity for 2025: Capital intensity is expected to increase to approximately 15% in 2025 from 14% previously, due to Ziply Fiber's planned CapEx spending for its fiber build-out.
Free Cash Flow Guidance for 2025: Free cash flow guidance for 2025 has been adjusted to a range of 6% to 11%, reflecting the impact of Ziply Fiber's capital investments and the partnership with PSP Investments.
Ziply Fiber 2025 Financial and Operational Performance: Ziply Fiber is projected to achieve EBITDA growth of over 20% in 2025, driven by operational execution and growth in its fiber-to-the-prem platform. Subscriber base growth and penetration improvements are expected, with significant growth potential in newer markets.
AI Fabric Revenue and EBITDA Contribution: Bell AI Fabric is expected to generate meaningful future unregulated revenue and EBITDA streams, with demand for Canadian AI data centers projected to grow at an annual rate exceeding 20%.
Bell Media Revenue and EBITDA Growth: Bell Media is expected to generate positive revenue and EBITDA for the full year 2025, despite potential macroeconomic headwinds impacting advertiser demand in the second half of the year.
Fiber Expansion in the U.S.: The plan is to reach a total of 8 million fiber passings in the U.S. through the Ziply Fiber acquisition and partnership with PSP Investments.
The selected topic was not discussed during the call.
Despite an 11.3% EBITDA increase, concerns include flat margin expectations and unclear tax benefits. Positive factors are AI Fabric's growth potential and strong free cash flow. The Q&A shows cautious optimism, with management providing limited specifics on tax benefits and satellite service details. Overall, the mixed guidance and lack of clarity on certain aspects lead to a neutral sentiment.
The earnings call summary indicates a mixed outlook with several negative aspects. The dividend cut and focus on deleveraging are concerning, and while the partnership with PSP and fiber expansion are positive, the lack of updates on asset divestitures and regulatory appeals raises uncertainties. The Q&A reveals some optimism about free cash flow and wireless performance, but the reduced fiber expansion and unclear guidance on certain issues contribute to a negative sentiment. Overall, the strategic adjustments and financial uncertainties are likely to lead to a negative stock price reaction.
The earnings call shows mixed signals: strong financial metrics with improved EBITDA margin and net earnings, but weak guidance with expected revenue and EPS declines. The dividend cut, despite positive free cash flow, may concern investors. The Q&A revealed some management vagueness, adding uncertainty. The fiber growth strategy and digital revenue growth are positives, but competitive pressures and pricing issues weigh negatively. Overall, the sentiment is neutral, with no clear catalyst for a strong price movement.
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