At a time when the TSX Composite Index was feeling the shockwaves of the looming trade war with the United States, some Canadian companies have provided a safe haven. Two of the Big Three telecom carriers outperformed the index in 2025 after two years of underperformance. Shares of Telus Corporation (TSX: T) and BCE (TSX: BCE) surged 7.3% and 4.15%, respectively, outperforming the TSX Composite Index surge of 1.5% year-to-date.
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Canadian telecom giants provide stability in volatile markets
Canadian telecom giants outperformed the market as they are not affected by the exports, nor are they affected by inflation. The prices for cellular and Internet access services fell steeply last year, getting a mention in Canada’s 2024 inflation numbers.
Telus and BCE have been spending billions of dollars on building fibre networks. In May 2024, the Canadian Radio-television and Telecommunications Commission (CRTC) required Bell Canada and Telus to share their fibre networks with small and big competitors in exchange for a fee, sending telecom stocks down. The motivation behind investing in fibre networks was diluted as telcos earlier had exclusive access to their network infrastructure. Now smaller internet providers could sell their services through fibre networks.
Opening the network to other competitors dilutes the return on investment. However, it promotes competition, as consumers have options to choose their internet service provider at affordable prices. The network access rules initially applied only in Ontario and Quebec, but they were spread countrywide in August 2024.
Telus and BCE have different views on network sharing.
Investing case of Telus
Telus supports the wholesale fibre mandate. It entered new markets, signing up customers in Quebec and Ontario by offering affordable internet bundled with mobility, entertainment, home automation, security, and health services. The telco is offering these services by accessing a rival’s network for a fee.
Telus turned the regulatory change in its favour. Instead of losing significant customers to small providers, small providers now face competition from Telus.
Investing case of BCE
BCE opposes network sharing as that will discourage big players from investing in network expansion. They would rather resell services over each other’s networks and earn revenue.
The federal government asked the CRTC to reconsider its rules surrounding wholesale fibre services, as it may be hampering investment and competition rather than supporting small internet providers. However, the regulator has upheld its decision.
Hence, BCE is restructuring its business and looking for new less-regulated revenue streams. The company is building cloud services and cybersecurity capabilities. It is also moving to digital media. All these are high-margin services that could offset the reduced returns from fibre networks.
Telecom stocks provide stable dividends
Telus and BCE are approaching the new regulatory landscape differently. Both present a good investing case. Telus is monetizing the wholesale fibre mandate and increasing its revenues. It is also looking for areas to cut costs and improve its earnings. Thus, Telus reduced its dividend payout ratio to 77% in the 12 months ending September 2024 from 88% a year before. It also increased its dividend per share for December 2024 by 3.4%.
Telus stock can give you the stability of a 7.6% annual yield amidst economic uncertainty. As Telus’s share price traded near its 2020 pandemic low, there is limited downside.
Similarly, BCE stock is trading near its 14-year low and the declining profits are a by-product of company-wide restructuring. The company has paused its dividend growth to fund the restructuring and accelerate debt repayment. This year could see a sharp uptick in revenue and profits because of a lower base year and the effects of restructuring.
The sharp dip in BCE’s share price has inflated its dividend yield to 11.4%. Even if the situation goes south and the telco halves its dividend, you will still get a 5.7% yield, providing stable returns in a volatile market.
