Of the five large Canadian companies operating in the telecommunications sector, it was BCE (Bell Canada Enterprises) which recorded the worst performance on the stock market in 2024.
The stock of the Canadian telecoms giant fell 35%.
At the close of trading last Thursday, BCE shares closed the session at $33.29, a drop of nearly $18 in the space of 12 months. This is its lowest level since August 2010, in more than 14 years.
1. HOW MUCH IS THE LOSS ON THE STOCK MARKET?
In terms of market capitalization, BCE shareholders saw the colossal sum of $16.4 billion go up in smoke.
And when we talk about BCE shareholders, know that you are one of them, directly or indirectly.
Indeed, in addition to the millions of individuals who hold BCE shares in their own portfolios, you should know that all mutual funds and pension funds in Canada hold blocks of BCE shares.
The best example? At the start of the year, the Caisse de dépôt et placement du Québec owned a block of 14.46 million BCE shares, for a value of $754.5 million. When the stock market closed on Thursday, the value of this block of shares was only $481 million, which represents a paper loss of $273 million for such a block.
2. WHY DID BCE FALL SO MUCH?
Because the company is struggling with several problems, including:
– A decline in revenues in key segments;
– The intensification of competition between Canadian telecommunications providers;
– A quarterly net loss of $1.2 billion attributable to an asset depreciation related to BCE's media activities (CTV, Bell Media);
– The fall in advertising revenue due to competition from digital platform giants.
3. WHAT DO BCE ANALYSTS THINK?
According to Morningstar, of the 17 financial analysts who follow the Canadian telecom giant, only one of them recommends buying it, despite the excessively low share price.
The vast majority of analysts, 14 out of 17, play “dead” by simply giving BCE a “Hold” rating. What is the message behind such a note? Holders of BCE shares should be patient!
This leaves two analysts for whom BCE's stock is clearly “For Sale.”
4. IS BCE’S ATTRACTIVE DIVIDEND AT RISK OF BEING CUT?
BCE senior management recently indicated that the dividend remains healthy.
We are talking here about an annual dividend of $3.99. Compared to BCE's current share price, the dividend represents a yield of almost 12%.
In this period when the yields offered on GICs are around 3%, a dividend that yields 12% is… extremely high.
To the point where many financial analysts “wished” that BCE's senior management would cut its dividend in order to allow the company to have greater financial maneuvering in this troubled period.
Last April, during his appearance before the Standing Committee on Canadian Heritage of the House of Commons, Bell CEO Mirko Bibic was criticized for being out of touch with the public by the Unifor union. He was accused in particular of carrying out thousands of layoffs while the dividend payments from Bell Canada Entreprises inc. (BCE) reached a record level of $3.7 billion in 2023.
5. HOW ARE OTHER BIG TELECOMMUNICIES PERFORMING?
The Canadian stock market has had a great year in 2024 with a 17.4% return so far. Of the 11 sectors of the Stock Exchange, only one is in the red and that is telecommunications with an overall decline of 20%.
As of last Thursday, Rogers Communications was down 28% over 12 months, and TELUS was down 16.6%.
Only two of the five major Canadian telecom companies managed to stay in positive territory, namely Quebecor with a gain of 3% and Cogeco with 5%.
