The chief executive of BCE Inc. blasted the national telecom regulator as he announced the company would further scale back the build of its fibre internet network.
The parent company of Bell Canada no longer plans to meet its previous target of reaching 8.3 million homes through its fibre footprint by the end of 2025, CEO Mirko Bibic said on Thursday, adding the company would make further capital spending cuts this year.
Bibic said the move is in direct response to a decision earlier in the week by the CRTC surrounding wholesale fibre services. Bell has been at loggerheads with rival Telus Corp. over whether Canada’s largest telecoms should be allowed to sell internet service in regions where they don’t own fibre networks, by paying the local incumbent to use their infrastructure.
The CRTC has so far sided with Telus in allowing them to do so — although it deferred a final decision on the matter until the summer — while Bell says that direction discourages the big players from investing in their own network expansions.
“To put it bluntly, we’re not in the business of building fibre for Telus’s benefit, and that’s what the CRTC policy that’s in place right now forces us to do,” Bibic told analysts on the company’s fourth-quarter earnings call.
He said it “makes no sense” that the CRTC would allow incumbents to resell internet service from each other at a time “when Canadian productivity is already lagging.”
“I don’t understand why a regulator would put in place policies that create disincentives to investment, puts jobs at risk, and puts at risk the building out of critical infrastructure,” he said.
“It seems like the wrong policy at exactly the wrong time.”
The CRTC has said its wholesale fibre rules are meant to level the playing field for smaller internet providers, many of which have struggled to compete with the big players.
After a limited version of the rules were set in late 2023, Bell responded by announcing it would cut network investment plans by more than $1 billion in 2024-25. On Thursday, Bibic said Bell had achieved more than 70 per cent of those reductions by the end of last year and would cut “by more than we anticipated” this year in response to the regulator’s latest decision.
“We will revisit our build out plan if the CRTC reverses its decision,” he said.
The move raised questions from analysts over Bell’s investment strategy, especially given its pending $5-billion acquisition of U.S. fibre internet provider Ziply Fiber, which operates in the Pacific Northwest. Bibic noted that deal, which is expected to close this year, comes as Bell seeks to transform into a “fibre-first company.”
An analyst asked Bibic what he feared happening if Telus did come in to resell Bell’s fibre service and what opportunities the company has to perhaps resell fibre services in other markets in the future.
Bibic said the best form of competition comes from companies building their own infrastructure.
“We would always rather compete on the basis of networks we own,” he said.
“We want to build. We want to compete against other well-capitalized companies that build their own, and we’re prepared to do that here, obviously, in Canada, and we’re prepared to seize on the growth opportunities in the U.S.”
The Ziply Fiber deal is being financed largely though proceeds of BCE’s $4.7-billion sale of its stake in Maple Leaf Sports & Entertainment to rival Rogers Communications Inc.
It’s one of a few ways the company is seeking to monetize non-core assets, said Bibic, who also highlighted BCE’s $1-billion sale of Northwestel Inc. He said a broader review is underway to find up to $7 billion in non-core asset divestitures, a figure which includes the MLSE and Northwestel deals.
The company reported its net earnings attributable to common shareholders amounted to $461 million or 51 cents per share for the quarter ended Dec. 31, compared with a profit of $382 million or 42 cents per share in the last three months of 2023.
Operating revenue for what was its fourth quarter totalled $6.42 billion, down from $6.47 billion a year earlier.
On an adjusted basis, BCE says it earned 79 cents per share, up from an adjusted profit of 76 cents per share a year earlier. Analysts on average had expected an adjusted profit of 72 cents per share, according to estimates compiled by LSEG Data & Analytics.
In its outlook for 2025, the company provided revenue guidance that ranged from a decline of three per cent for the year to an increase of one per cent. Adjusted earnings per share for 2025 are expected to decline between eight and 13 per cent compared with 2024.
BCE expects to maintain its dividend at its current level after pausing any future hikes in November.
Desjardins analyst Jerome Dubreuil said the guidance is roughly in line with expectations, but “likely insufficient to turn investors’ perspective around on the stock.”
“BCE announced a significant capex cut, which could be the right thing to do in this environment,” he wrote.
“However, we believe it is fair to say that we should not count on capex (in Canada) to improve the top line going forward.”
He said he would not rule out a dividend cut later in 2025 “given the uncomfortable payout situation and accelerated spending in the U.S.”
BCE shares were trading at $34.28 midway through Thursday on the TSX, down $1.62 or around 4.5 per cent.
During the latest quarter, BCE added 56,550 net postpaid mobile phone subscribers, down 56.1 per cent from the same period a year earlier, which it attributed in part to Canada’s slowing population growth.
It also cited higher customer churn — a measure of subscribers who cancelled their service — which increased to 1.66 per cent. Bell’s wireless mobile phone average revenue per user was $57.15, down 2.7 per cent from the prior year.
“We need to get churn down,” Bibic said in a phone interview.
“I’m still not happy with churn, but we’ve got programs in place and we know we’ve got to tackle it. I think in the kind of environment where you have slowing growth and lower prices, you need to manage your cost structure and you need to retain your customers.”
— With files from Craig Wong in Ottawa
This report by The Canadian Press was first published Feb. 6, 2025.
Companies in this story: (TSX:BCE)
