BCE Q4 Earnings Surpass Estimates, Revenues Increase Y/Y
BCE Inc. BCE reported healthy fourth-quarter 2021 results, wherein both the bottom line and the top line surpassed their respective Zacks Consensus Estimate. Significant broadband investments, 5G network acceleration program on the back of an accretive subscriber base and robust financial position bolstered the company’s operating momentum. Shares of this Canada-based company inched up 0.8% on Feb 3, closing the trading session at $53.17.
Net Income
Net income (from continuing operations) in the December quarter declined 29.7% year over year to C$625 million or C$0.69 per share. The year-over-year decrease was mainly due to a one-time gain realized on the sale of Bell data centers to Equinix in the fourth quarter of 2020 for $211 million, higher depreciation and amortization expense and higher income taxes. This was partially offset by adjusted EBITDA growth and higher other income.
Adjusted net income was C$692 million ($549 million) or C$0.76 (61 cents) per share compared with C$731 million or C$0.81 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 5 cents.
In 2021, net income (from continuing operations) came in at C$2,709 million or C$2.99 per share compared with C$2,498 million or C$2.76 per share in 2020. Adjusted net income in the year totaled C$2,895 million or C$3.19 per share compared with C$2,730 million or C$3.02 per share in 2020.
BCE, Inc. Price, Consensus and EPS Surprise
BCE, Inc. price-consensus-eps-surprise-chart | BCE, Inc. Quote
Revenues
Quarterly total operating revenues inched up 1.8% year over year to C$6,209 million ($4,954 million). This was driven by a 3% rise in service revenues, which totaled C$5,243 million, reflecting solid wireless, residential Internet and media growth. Product revenues declined 4.5% to C$966 million owing to lower sales of business wireline data equipment and fewer mobile device transactions. The top line beat the consensus estimate of $4,928 million.
In 2021, operating revenues totaled C$23,449 million compared with C$22,883 million in 2020.
Segment Results
Bell Wireless revenues increased 2.8% year over year to C$2,475 million, driven by strong service revenue growth. This was partly offset by lower year-over-year product revenues. Service revenues jumped 6.3% to C$1,652 million, driven by its focus on higher-value smartphone loadings, continued healthy mobile phone postpaid subscriber base growth and higher blended average revenue per user. Product revenues were down 3.6% to C$823 million. This reflects a reduction in sales transaction volumes attributable to lower mobile device upgrades, a greater mix of bring-your-own-device customer activations as well as lower year-over-year consumer electronics sales at The Source. The segment also witnessed mobile device and consumer electronics inventory constraints resulting from the pandemic-induced supply chain challenges. Bell added a total of 109,726 new postpaid and prepaid mobile phone subscribers, up 77.8% from 61,716 in the fourth quarter of 2020.
Bell Wireline revenues slipped 0.5% year over year to C$3,079 million. Wireline service revenues were flat at C$2,934 million due to strong residential Internet revenue growth and higher business service solutions revenues from expanded cloud and security offerings. This was partially offset by ongoing declines in legacy voice, data and satellite TV services along with the non-recurrence of high demand for work-at-home connectivity solutions as a result of the COVID-19 restrictions in the fourth quarter of 2020. Product revenues fell 10.5% to C$145 million, mainly due to lower sales of data equipment to enterprise business customers resulting from delayed spending because of the pandemic-induced supply chain disruptions.
Bell Media generated revenues of C$849 million, up 7.3% year over year. The growth was driven by higher subscriber revenues and increased TV advertiser spending.
Other Details
Adjusted EBITDA in the reported quarter was C$2,430 million, up 1.1% year over year. The rise was driven by an increase of 5.3% in wireless and 1.1% in wireline segments, partly offset by a 19% decrease in media. Adjusted EBITDA margin was 39.1% compared with 39.4% in the prior-year quarter.
Cash Flow & Liquidity
In 2021, BCE generated C$8,008 million of cash from operating activities compared with C$7,754 million in 2020. Free cash flow was C$2,995 million compared with C$3,348 million a year ago.
As of Dec 31, 2021, the company had C$207 million ($163 million) in cash with no cash equivalents and C$27,048 million ($21,297.4 million) of long-term debt compared with the respective tallies of C$224 million and C$23,906 million in the year-ago period.
2022 Outlook
BCE has issued the financial guidance targets for 2022. It expects revenues to grow between 1% and 5% and adjusted EBITDA between 2% and 5%. Adjusted earnings per share are estimated to grow in the range of 2-7%. Free cash flow growth is projected in the band of 2-10%. Annualized common dividend per share is estimated to be $3.68.
Zacks Rank & Stocks to Consider
BCE currently has a Zacks Rank #3 (Hold).
Few better-ranked stocks in the broader industry are NiSource Inc. NI, Deutsche Telekom AG DTEGY and Vivendi SE VIVHY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for NiSource’s next-year earnings has been revised 1.4% upward over the past 90 days.
NiSource delivered a trailing four-quarter earnings surprise of 2.3%, on average. It has soared 30.4% in the past year. NI has a long-term earnings growth expectation of 6.7%.
The Zacks Consensus Estimate for Deutsche Telekom’s next-year earnings has been revised 3.3% upward over the past 60 days.
Deutsche Telekom boasts a VGM Score of A. Its shares have gained 8.8% in the past year. DTEGY has a long-term earnings growth expectation of 9.9%.
The Zacks Consensus Estimate for Vivendi’s next-year earnings has been revised 7.9% upward over the past 60 days.
Vivendi has a VGM Score of B. The stock has gained 2.4% in the past three months. VIVHY has a long-term earnings growth expectation of 17.4%.
Conversion rate used:
C$1 = $0.793204 (period average from Oct 1, 2021 to Dec 31, 2021)
C$1 = $0.787391 (as of Dec 31, 2021)
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