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Summary
- The rise in demand for communications services amid the pandemic impacted the performance of the telecom companies, such as BCE Inc (TSX:BCE).
- Another factor that impacted the telecom industry in the recent times in the development of the 5G network.
- BCE is one of the top trending stocks on the Toronto Stock Exchange (TSX) for its high trading activities and performance among other telecom companies.
While most sectors endured dips in their demand during the coronavirus pandemic, telecom companies stood at an advantage for the most part. At a time when physical proximity was discouraged with new laws of social distancing, peoples’ reliance on the telecom industry for connectivity rose. The rise in demand impacted the performance of the telecom companies, such as BCE Inc (TSX:BCE).
Another factor that has brought BCE Inc back in focus is the announcement of Rogers Communications buying Shaw Communications, which came on Monday, March 15.
Once the deal goes through, the merged company is expected to hold a market cap of about C$ 48 billion, bringing it quite close BCE’s current C$ 50-billion market cap.
Let’s take a closer look at Canadian telecom giant BCE Inc’s latest stock and financial performances to gauge its investment profile.
BCE Inc (TSX:BCE)
BCE is one of the top trending stocks on the Toronto Stock Exchange (TSX) for its high trading activities and performance among other telecom companies. It posts a price-to-earnings ratio of 20.5 and a return on equity of 14.22 per cent, as per the TMX portal.
BCE stock hit its highest point of 2021 last week (March 11), at C$ 58.16, after the company announced a new partnership with Honda Canada. Though the stock has since dwindled, it still records a year-to-date (YTD) growth of over two per cent.
©Kalkine Group 2021
The Canadian telecom giant also announced on March 11 that it has become the first communications company in North America to receive ISO 50001 certification for energy management. The certification came after the company announced its plan to become carbon neutral in 2025.
BCE’s Financial Performance
The expansion of 5G network plays a significant role in the present and future growth of the telecom industry. While announcing 2020’s annual and last quarter financials, BCE said that it will increase its capital investment in the fibre and wireless expansion by about C$ 1 billion to C$ 1.2 billion over the period of next two years.
In 2020, BCE saw recorded more than six million combined direct fibre and rural wireless home internet locations. The Quebec-based telecom enterprise expects this number to expand up to around 6.9 million this year with the enhanced capital plan.
©Kalkine Group 2020
BCE posted a 28.9 per cent year-over-year (YoY) spike in its Q4 2020 net earnings of C$ 932 million. Its annual net earnings for 2020, however, dipped by 17 per cent YoY.
While BCE also felt the pandemic’s financial crisis in 2020, it announced plans to increase its dividend by 5.1 per cent in the latest financials. It currently has a dividend yield of 6.261 per cent, as per TMX.
Its retail Internet net additions ballooned by 25 per cent YoY to 44,512 in the fourth quarter last year, while its internet revenue grew by 12 per cent YoY.
With a present market cap of C$ 50.56 billion, as per TMX, BCE stands as the largest telecom company in Canada by value. However, a merger between Rogers and Shaw could see the new entity give BCE a competition for the title.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
