On Jun 26, we maintained our Neutral recommendation on
). The company has a robust wireless business and enjoys strong
subscriber addition, drop in churn rates as well as strength in
the media sector. However, the company faces certain headwinds
that will likely slow down its growth momentum. The Canadian
telecom firm holds a Zacks Rank #3 (Hold).
We believe that BCE will benefit from six strategic initiates
including investment in broadband network and services,
accelerating wireless services, leveraging wireline momentum,
expanding media coverage, improving customer service and
achieving a competitive cost structure. These measures are
expected to generate higher revenue per user and attract new
The company's wireless unit is expected to drive growth in the
coming days, backed by investments in network coverage, favorable
geographic and customer segment mix, lucrative data plans as well
as offering of net protection. On the wireline front, BCE is
making steady progress on reducing the erosion of network access
services lines, improving data service revenues,
fiber-to-the-home deployments, expansion of IP connectivity and
enhancing managed services.
Further, we expect to see strong contributions from the Bell
Media segment that is poised to benefit from rate increases for
the specialty channels, new agreements with the major players and
launch of innovative products. We also appreciate BCE's efforts
to generate higher shareholder returns through dividend growth.
Despite these positives, we prefer to stay on the sidelines
considering the risks such as stiff competition, the constant
need for investments to remain technologically advanced and union
issues. Moreover, we remain apprehensive that failure on the
company's part to achieve its set goals will affect its revenues
The second and third quarters of 2013 have the Zacks Consensus
Estimate for earnings pegged at 76 cents and 78 cents per share,
respectively. This reflects a year-over-year decline of 25.3% in
the next quarter and growth of 3.0% in the third.
Companies operating within the communication sector that are
worth taking notice of include
Nippon Telegraph and Telephone Corporation
Telefonica Brasil, S.A.
). While the former holds Zacks Rank #1 (Strong Buy), the other
two stocks carry Zacks Rank #2 (Buy).
BCE INC (BCE): Free Stock Analysis Report
NIPPON TELE-ADR (NTT): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
TELEF BRASIL SA (VIV): Free Stock Analysis
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