The Canadian telecom industry has experienced some real disruption in the last few years. This has sent telecom stocks like BCE Inc. (TSX:BCE) in a tailspin. The future is not as certain as it once was, not just for BCE, but for telecoms in general. This has sent these traditionally conservative lower-growth companies on a quest for growth.
Let’s take a look at how BCE is doing. Is the telecom company finally turning the tide? Has BCE stock on the TSX finally hit rock bottom?
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BCE stock: A lesson in patience
The Canadian telecom industry includes landline phone connections, mobile phone connections, data services, broadcast distribution, and the internet. This business was once a very low-risk and predictable one.
In recent times, however, telecom companies were thrown a curveball. As the Government of Canada was seeking to lower mobile phone prices, policymakers elected to open the market up to competition. This sent shockwaves through the telecom industry. At a time when telecoms spent a massive amount of money (financed with debt, of course) on 5G infrastructure, mobile prices fell, along with profit margins and cash flows.
This left companies like BCE feeling like sitting ducks – trying to finance their large debt loads while grappling with declining profitability. BCE’s stock price below highlights the effects of increased competition on the company – the stock has fallen by more than 50% since its 2022 highs. In fact, it’s trading at lows not seen for more than 15 years.
Recent results show signs of improvements
In the fourth quarter of 2025, BCE reported adjusted net earnings per share (EPS) of $0.69. This was 12.7% lower than the same period last year, but it was above expectations that were calling for EPS of $0.63. This is the second consecutive quarter that BCE beat expectations, after falling short in the prior two quarters.
The highlights of the quarter included a 2.3% increase in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as a 100 basis-point increase in its margin to 41.6%. Interestingly, this was BCE’s highest Q4 margin in 30 years. BCE experienced operating momentum in its wireless business, and internet revenues increased 16.6%. The increase in internet revenues was driven in part by the contribution from Ziply Fiber. Recall that Ziply was the U.S. acquisition that BCE completed last year. It’s the largest broadband and fibre internet provider in the US Pacific Northwest. In an underpenetrated US fibre market, BCE gains more scale, while diversifying its operating footprint and establishing a platform for further expansion.
BCE’s balance sheet
Before I close off my article, let’s take a look at BCE’s balance sheet and debt load. As of 2025, BCE’s net debt leverage ratio was stable versus last year. This means that the Ziply Fiber acquisition was leverage neutral. This ratio is expected to decrease to 3.5 times by the end of 2027.
Finally, BCE’s dividend is well supported and its dividend payout ratio is a healthy 41%.
Looking ahead
For 2026, management is guiding for EPS to decrease between 5% to 11% to $2.50 to $2.65. But free cash flow has a much better outlook. Management is expecting free cash flow to increase between 4% and 10% to $3.3 billion to $3.5 billion.
The bottom line
BCE’s business is changing – some of these changes are for the better, some are for the worse. Today, BCE’s stock price seems to only be factoring in the worst. Thus, BCE stock is trading at a mere 13.5 times this year’s expected earnings and 12.9 times next year’s expected earnings. I would definitely suggest taking a look at this attractively valued 5% yielder for income and long-term capital gains. While there are no guarantees, BCE has a vast network, customer base, and a recovery plan that is resulting in improvements. The risk is more than priced into BCE’s stock price on the TSX.
