BCE (Symbol-BCE)

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Shakespeare
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Re: BCE (Symbol-BCE)

Post by Shakespeare »

Ottawa approves BCE-MTS tie-up; deal to benefit Xplornet - The Globe and Mail
Federal authorities have approved BCE Inc.’s $3.1-billion deal to acquire Manitoba Telecom Services Inc., one of the country’s last remaining regional telephone operators.

As part of the approval process, BCE agreed to divest wireless airwaves and subscribers to Xplornet Communications Inc., enabling the rural Internet provider to start selling mobile services in Manitoba.

This means the province will continue to have four wireless operators, although Xplornet has not previously sold cellular services.
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Re: BCE (Symbol-BCE)

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My question is not related to the stock, but long term bonds of Bell Canada.
How safe is Bell Canada, for something that matures in 15 years? Yielding about 4.3% today. Mostly concerned with credit risk and not interest rate risk.
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Re: BCE (Symbol-BCE)

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There are no guarantees on bonds but the higher the credit rating, the lower the risk of a company defaulting on its bonds. BCE is highly unlikely to go into receivership given its subscriber base and its regulated business. That said (and without checking the market), the current yield on BCE bonds is pretty low given the remaining duration of their bonds.

More importantly, what is your view of inflation over the next 15 years? Would you be satisfied with a 3% yield if the bond yield curve moved up another couple of percentage points? Would you hold to maturity or take a bath on selling that bond into the open market?
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ghariton
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Re: BCE (Symbol-BCE)

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BCE current credit ratings for its long term debt are A (low) from DBRS, Baa1 from Moody, and BBB+ from S & P

For its subordinated long term debt, the corresponding ratings are BBB, Baa2, and BBB.

That s a solid corporate-grade rating, but nothing extra special. The average 10-year default rate would be just under 0.5% (sorry, I don t have access to 15-year default rates).

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Re: BCE (Symbol-BCE)

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ghariton wrote:BCE current credit ratings for its long term debt are A (low) from DBRS, Baa1 from Moody, and BBB+ from S & P

For its subordinated long term debt, the corresponding ratings are BBB, Baa2, and BBB.

That s a solid corporate-grade rating, but nothing extra special. The average 10-year default rate would be just under 0.5% (sorry, I don t have access to 15-year default rates).

George
We are in the age of tech disruption. Wonder what something like BCE resembles in 2032?
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Shakespeare
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Re: BCE (Symbol-BCE)

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We are in the age of tech disruption.
And have been since, say, 1825.
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Re: BCE (Symbol-BCE)

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Re: BCE (Symbol-BCE)

Post by Sensei »

Hi,

Good question Gipper. To me the telecom industry is in the business of moving information. Information is increasing very rapidly, and so must be the means of moving it. BCE as the largest Canadian incumbent so theoretically should be best equipped to grow in a growing industry.

Why 2032?
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Re: BCE (Symbol-BCE)

Post by Peculiar_Investor »

soldToSoon wrote:How safe is Bell Canada, for something that matures in 15 years?
2017 + 15 maturity = 2032. QED :lol:
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Re: BCE (Symbol-BCE)

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It occurs to me as I watch Bell satellite 720p on my new 4K TV, awaiting a call from Telus on a switch, that satellite TV will show little or no growth and may shrink because it can't handle 4K bandwidth.
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ghariton
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Re: BCE (Symbol-BCE)

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Shakespeare wrote: 15 Jun 2017 21:22 It occurs to me as I watch Bell satellite 720p on my new 4K TV, awaiting a call from Telus on a switch, that satellite TV will show little or no growth and may shrink because it can't handle 4K bandwidth.
New technology, in the form of High Throughput Satellites (HTS), is just starting to be implemented. (Essentially it uses space division multiplexing.) So far the main applications have been large data transfers. Satellite may also be upgraded, provided the service providers can charge enough.

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Re: BCE (Symbol-BCE)

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(Essentially it uses space division multiplexing.)
What else would a satellite use? :lol:
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Re: BCE (Symbol-BCE)

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Ten years later and Bloomberg has done a story about How the World’s Biggest Buyout Deal Crashed and Burned with lots of information/viewpoints from those on the inside of the deal. An interesting summertime read.
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Re: BCE (Symbol-BCE)

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Peculiar_Investor wrote: 02 Aug 2017 09:28 Ten years later and Bloomberg has done a story about How the World’s Biggest Buyout Deal Crashed and Burned with lots of information/viewpoints from those on the inside of the deal. An interesting summertime read.
I bought the stock for something like $20 after the deal collapsed and we were in the midst of the financial crisis of 2008. A crisis provides opportunity..
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Re: BCE (Symbol-BCE)

Post by Peculiar_Investor »

Possible signal on succession plan? CNW | BCE appoints Mirko Bibic as Chief Operating Officer. The G&M thinks so, BCE signals succession plan with new COO - The Globe and Mail (paywall).
Globe and Mail wrote:BCE Inc. has named Mirko Bibic its new chief operating officer, signalling a potential succession plan for the job of CEO.

The long-time regulatory and corporate development executive will now also assume responsibility for the company’s key telecom units, overseeing its residential, wireless and small business divisions.

The move, announced Thursday, will give Mr. Bibic experience with BCE’s front-line operations, making him a clear future contender for the job of chief executive officer.
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Re: BCE (Symbol-BCE)

Post by thedude »

Is this getting close to a buy after nearly a 20% drop? Bell Media division is what is driving down their results despite only accounting for 14% of total revenue the division is a total dog. Wireless and wireline growth has been decent.

Does anyone see any consolidation in the future for this sector? Would CRTC even allow this?
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Re: BCE (Symbol-BCE)

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Consolidation in which? Content or delivery? Content is on it's way out slowly but surely. No consolidation will be permitted in delivery.
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Re: BCE (Symbol-BCE)

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This thread is dated but seems appropriate for this.

There was a recent post by Thurman and subsequent discussion in the Preferreds thread about BCE buying up their pref shares. This is normal course issuer stuff so apparently nothing unusual there.
In addition to helping reduce the outflow of dividend payouts at attractive purchase prices, they are reducing their obligation to cumulative-dividend-rights (on their rate-reset and fixed-floaters). That might make good sense as well.

There was some discussion in the What and why did you Buy... thread a few months back, noting BCE and T's comments on their dividend payouts (until we were taken to task for posting in an inappropriate thread by a BCE shareholder :wink: )

BCE, T, and RCI have been in general decline since April 2022. Tempting common share dividend yields though (7.5% and 6.4% respectively).

The reason I've posted this is to note some comments on Mawer's Oct 12 discussion of Canadian Equities: Inflation, Interest Rates, and Decision Making.

In it, Mark Rutherford notes:
if we go back maybe five years ago, we would've had over 10% of the portfolio in Rogers, Shaw, Telus, and Bell, and one thing that's really changed over the past few years and really over the past decade has been those telecom companies have really exercised quite a bit of pricing power.

And so relative to maybe 2008 or 2007, the last really big recession prior to COVID-19, they still had some pretty big growth engines in them, whether that's home, internet, mobile penetration and even mobile pricing longer term. Whereas when we look at those same companies today, they don't have quite the same pricing power that they had, and they don't have the same growth in terms of penetration that they once had. That, in addition to balance sheet stress, has actually led us to really reduce that exposure. It's below 2% of the portfolio now, and we do not own Bell. That was recently exited from the portfolio. And really, that's just a concern about how much pricing power there is. They have a lot of debt on the balance sheet and really outspending their cash flow.

We want our companies to really live within cash flow and as we've seen the cards adjust, that has really become less favourable for the telecom companies. And the last point is that we're seeing a much more public regulator that's coming out with regulation that's a lot more adamant that prices come down or remain stable, which would be a big shift from five or 10 years ago.

So, that would be another really big shift in the portfolio that happens slowly over time but then over five years, has a pretty big impact on overall exposure. That's one that I would point out with the telecom companies. That's been a big shift over the last five years.

I sold my BCE last year, but still own some Telus. I'll sell it at some point but I'm trying to stagger capital gains over the years. Perhaps if I wait another year, that 'problem' will have gone away though. :(
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Re: BCE (Symbol-BCE)

Post by JaydoubleU »

Interesting point of view. High debt, high (too high?) dividends, capex, etc. We could be talking about pipelines or utilities here, not just the telecoms.

Was there any mention in the Mawer discussion of the potential impact of 500,000 new immigrants arriving in Canada each year?

Even a conservative estimate of say, 10%, would mean an additional 50,000 new subscribers. Is this not an area of growth?
Last edited by JaydoubleU on 16 Oct 2023 10:54, edited 1 time in total.
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Re: BCE (Symbol-BCE)

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JaydoubleU wrote: 16 Oct 2023 10:29 Interesting point of view. High debt, high (too high?) dividends, capex, etc. We could be talking about pipelines or utilities here, not just the telecoms.
BCE's earnings and free cash flow are below its dividend at the moment. But it has been that way, on and off, for the last few years. A key question would be, can they ramp down cap-ex in the next few years? At some point everyone will have fiber and the marginal gains for cell phones will be minimal or too harshly constrained by physics. I don't know.

I was interested in the debt angle and took a quick look last night.

The latest quarterly presentation indicates, "weighted average annual after-tax cost of public debt of
2.96% with average term to maturity of 12.4 years". That doesn't sound bad and some of their bonds are offering yields of ~5-6%. So, inflation might be great provided they can raise prices near the rate of inflation.
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Re: BCE (Symbol-BCE)

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weighted average annual after-tax cost of public debt of 2.96% with average term to maturity of 12.4 years". That doesn't sound bad.
Doesn 't sound bad at all, and thanks for the info.

The market seems ok with BCE, up a little under a buck today.
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Re: BCE (Symbol-BCE)

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BCE Inc., Canada’s largest telecommunications company, said it will chop capital spending by $1 billion after a regulator [CRTC] ordered the country’s major phone providers to open up their broadband networks to smaller rivals at prescribed rates. The decision by Canada’s telecom regulator applies to Ontario and Quebec, the two provinces where more than 60 per cent of the population lives, and is intended to bring more competition to home internet services and reduce costs for consumers. ... the ruling was a response to years of declining competition from independent internet sellers, a number of which have been acquired by the major telecom firms.
The regulator will set interim rates at which BCE and other large phone companies must sell wholesale access to their high-speed “fibre to the home” networks. [Financial Post]
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Re: BCE (Symbol-BCE)

Post by Bylo Selhi »

^ Translation: Mirko is having a hissy fit because the new CRTC commissioner won't let him and Tony keep use their cozy little duopoly to block competition in the fibre Internet space.
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Re: BCE (Symbol-BCE)

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Bylo Selhi wrote: 07 Nov 2023 16:23 ^ Translation: Mirko is having a hissy fit because the new CRTC commissioner won't let him and Tony keep use their cozy little duopoly to block competition in the fibre Internet space.
It does sound like a hissy-fit doesn't it.....
Gee - almost like south of the border these days... but we dare not speak of that

But, once "the moment" passes - and the new rates are set,
a new game will, no doubt, be invented to put another hurdle in the way of independents

BCE is BCE - they've been around the block more decades than I've been walking
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Re: BCE (Symbol-BCE)

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Bylo Selhi wrote: 07 Nov 2023 16:23 ^ Translation: Mirko is having a hissy fit because the new CRTC commissioner won't let him and Tony keep use their cozy little duopoly to block competition in the fibre Internet space.
Thank-you for the translation.
Distributel (was an independent ISP until BCE bought them out a year ago) is still excluded from their fibre network. :roll:
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