The numerous shareholders of the Canadian telecommunications colossus BCE, owner of Bell, suffered a new blow on the stock market on Thursday, after the announcement of a net loss of 1.23 billion, or $1.36 per share, for its third quarter ended September 30.
Updated yesterday at 5:06 p.m.
This loss is the opposite of the net profit of 640 million, or 70 cents per share, announced by BCE during the comparable quarter last year.
In their quarterly earnings statement, BCE executives attributed the size of this third-quarter net loss to the impact of a $2.1 billion impairment charge that had to be recently recognized for the impairment loss. television and radio assets of its subsidiary Bell Media.
Furthermore, BCE also announced Thursday that its operating revenues in the third quarter, at 5.97 billion, fell by 1.8% compared to the 6.08 billion recorded during the comparable quarter a year ago.
As a result, BCE’s top executives announced to its shareholders that they were lowering their revenue expectations for fiscal 2024. They now expect an annualized decline of around 1.5%, which is a reversal of their earlier forecast of a modest revenue increase of 1-4% in 2024 compared to the previous financial year.
Concurrence « intense »
This forecast reversal comes as Bell faces lower-than-expected wireless product revenues and sustained pressure on wireless pricing.
Bell is also experiencing a higher rate of churn and cancellation of telecommunications services in a context of increased competition and promotional offers.
“I’m not happy with the churn rate. I don’t think anyone would be happy with these numbers,” admitted BCE President and CEO Mirko Bibic during his quarterly results conference call with analysts and major investors.
According to Mr. Bibic, Bell faces “what is arguably the most competitively intense market that we have seen.”
It’s a reality of the market: consumers continue to look for deals because of the sustained and aggressive promotional offers that are on the market.
Mirko Bibic, President and CEO of BCE
The poor results come a day after the Canadian Radio-television and Telecommunications Commission (CRTC) denied an appeal of a partial ruling last year that allows small internet service providers to sell services to their customers via Bell’s fiber optic network in Ontario and Quebec.
On the stock market, it was enough to trigger another depreciation of BCE shares, up to 5% and below the threshold of $38 per share at midday on Thursday.
They closed the session down 2.8%, at $38.94 per share, which represents their lowest market value since October 2011, 13 years ago.
For BCE shareholders, this is a second slap in the face a few days apart. On Monday, the value of BCE shares fell by almost 10% after announcing a major acquisition in the United States and a freeze on its dividend policy until further notice.
BCE announced that it had signed an agreement to purchase fiber optic internet access provider Ziply Fiber, based in the northwest of the United States, for approximately 5 billion Canadian dollars.
To pay for this acquisition in cash, BCE intends to use $4.2 billion from the recent sale of its 37.5% stake in Toronto-based professional sports group Maple Leaf Sports & Entertainment.
In its quarterly results announcement, BCE reiterated its goal of growing its fiber optic networks to reach 12 million locations served in both countries by the end of 2028.
From an analyst point of view, BCE will have a lot to do to restore investor confidence in the recovery of net results in a context of downward pressure on telecommunications prices.
“Despite slightly better results than expected in its media activities, which are less important at BCE, the results of its very important telecommunications activities continue to evolve in the wrong direction,” says analyst Jérôme Dubreuil, of Desjardins Marché. of capital in Montreal, in a notice to its investor clients.
Moreover, according to the financial information firm Refinitiv, a good number of the fifteen or so analysts who follow BCE have lowered their target price or revised their recommendation concerning the shares of the telecommunications and media group since the start of the week.
Their average target price a year from now is around $46 per BCE share, down 8% from the average target price of $50 per share in early August.
With The Canadian Press
ECB at a glance
- Activities: telecommunications (Bell) and electronic media
- Head office: Montreal
- Turnover (annualized as of September 30): 24.46 billion (-0.7% over one year)
- Operating profit (annualized as of September 30): 2.87 billion (-43% over one year)
- Net profit (annualized as of September 30): 270 million (-88% over one year)
- Market capitalization (as of November 7): 35.5 billion
Source : Refinitiv
