BCE (TSX: BCE) stock continued its downtrend, falling 8.8% between April 2 and 8, when the TSX Composite Index fell 11.1%. The telecom stock has fallen to a 15-year low. I won’t be surprised if the stock hits its 2009 low of around $21–$24. The massive scale of U.S. tariffs on all trade partners has increased the fears of a recession.
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Impact of Trump tariff on BCE
BCE won’t be directly impacted by tariffs, as it earns most of its revenues by serving Canadians. However, it is exposed to indirect impacts. For instance, the depreciation of the Canadian dollar could make BCE’s acquisition of American fibre-optic internet provider Ziply Fiber expensive. Moreover, tariffs could negatively affect economic growth.
Inflation and slow economic growth could affect business spending, making it difficult for BCE to find a buyer for its non-core assets. Consumer spending could also be affected. However, the spending on the Internet and mobile communications will continue. Thus, BCE stock dipped lower than the market.
The 8.8% dip was because of the panic among investors looking for stocks with strong balance sheets and cash flows. BCE’s $32.8 billion long-term debt has inflated its financing costs and reduced its financial flexibility to handle crises. Moreover, the management, in its 2025 guidance, did not consider the impact of wide-ranging U.S. tariffs on imports from Canada and Canada’s retaliatory tariffs.
If the tariff war intensifies, BCE stock could fall further, as the indirect impact could also intensify.
BCE stock analysis as a value proposition
As Warren Buffett says, be greedy when others are fearful. But you should only be greedy for stocks that have potential value. Value is derived from the company’s core operations and financial strengths. On the operations front, value is when the company has a sticky customer base, and supplementary offerings are not strong enough to make its customers switch.
Value in business operations
BCE’s stock fell as the company’s revenue fell in 2024, and it guided another 3% dip in revenue in 2025. However, the major reasons for this dip are the closing of The Source stores and the decline in average revenue per user (ARPU) because of competitive pricing. Internet revenue and mobile phone postpaid additions continue to grow. And the price war is behind it now.
Hence, you can be assured that the company will continue to earn stable revenue from its core operations of the internet and mobile communications, irrespective of the economic conditions. The stock is trading at a price-to-sales ratio of 1.1 times, the level last seen in June 2009 during the Great Recession.
Value in financial stability
The company’s financial health is slightly concerning, given the significant cash going out in dividends and interest. From a $7 billion operating cash flow in 2024, $3.9 billion was spent on capital expenditures and $3.6 billion on dividends. The outflow is $500 million more than the inflow, which puts stress on the cash flow.
The management is bridging this gap by reducing its 2025 capex by $500 million. Moreover, the $300 million spent on severance pay from the massive job cuts and the $2.9 billion impairment of Bell Media assets in 2024 will not continue in 2025. This could increase its cash inflow and improve financial flexibility.
If things worsen, BCE has options to unlock liquidity, such as reducing its capex further, opting for a temporary dividend cut, and restructuring debt to take advantage of the Bank of Canada’s interest rate cuts.
All the above actions could have a positive long-term impact on the company’s finances, driving the stock price.
The potential value and income proposition
BCE stock is trading at a 10.4 times price-to-free cash flow, its lowest in 15 years. Its FCF is expected to increase by 11–19% in 2025, excluding the impact of tariffs.
Now is a good time to buy the dip and lock in a 13.3% yield. Even if the company halves its dividend in the short term, it will make up for the cut with accelerated dividend growth in the coming years.
