BCE Poised to Grow on Wireless Strength, Competition Rife - Analyst Blog
BCE Inc.’s (BCE) wireless segment is poised to benefit from solid subscriber additions at the postpaid segment along with increased data usage by smartphone users. On the wireline front, BCE is expected to benefit from growth in Fiber TV and Fiber Internet customers. However, persistent loss of large business customers in Network Access service will affect its wireline segment.
BCE is also positioned to gain from favorable activities in the wireless business, strong subscriber addition, drop in churn rate, the Astral acquisition and focus on technology upgrades. The company continues to focus on six strategic areas including investment in broadband network and services, accelerating wireless services, leveraging wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure. These initiatives are expected to generate higher revenue per user and attract new customers.
BCE’s wireless segment is expected to benefit from its postpaid business as it continues to enjoy solid subscriber addition. Significant investments in network coverage, customer retention, lucrative data plans and the launch of new handsets along with the offering of net protection will drive customer addition further.
In an effort to enhance its retail presence in Canada, BCE agreed to purchase Canadian retailer, Glentel Inc., for $586 million. The deal is expected to close by the end of the first quarter of 2015, subject to consent from shareholders and regulators. We believe BCE’s decision to acquire Glentel will help the company increase its wireless revenues, ARPU and curtail churn rate.
The successful implementation of the company’s six core goals is the most critical factor in determining its future profitability. The execution requires enhanced employee skills, more capital investments and targeted cost reductions. Failure of any of these changes might have an adverse impact on the company’s financials and growth prospects, thereby leading to lower profitability and revenues.
With rapid growth in video and other bandwidth-intensive applications on the Internet and mobile devices, BCE will continue to invest substantially in LTE, broadband and fiber in order to provide additional capacity on Internet and wireless networks. The company may be unable to recover these costs from customers owing to competitors’ short-term pricing of comparable services. Meanwhile, intense price competition is compelling prospective and existing customers to opt for discounted monthly rate plans offered by competitors.
Other key players in this sector are AT&T, Inc. (T), Chunghwa Telecom Co., Ltd. (CHT) and Cincinnati Bell Inc. (CBB).
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