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BCE Secures Multi-Year Contract From Government of Alberta

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BCE Inc. BCE recently announced that its wholly-owned subsidiary, Bell Canada, has secured a multi-year contract to operate Alberta SuperNet — a government-led broadband initiative.

Alberta SuperNet network was created by Alberta government for offering broadband connectivity to public institutions including hospitals, libraries, schools, government facilities in 429 urban and rural communities throughout the Canadian province.

Currently, Bell owns and operates assets of the Alberta SuperNet network that serves 27 urban centres. With the latest contract win, it will avail of the network connecting a total of 402 communities in rural Alberta.

This apart, Bell entered into an agreement to purchase the Axia NetMedia Corporation — an operator of SuperNet's rural assets, based in Calgary. However, financial terms of the deal were not disclosed.

Existing Business Scenario

BCE’s Wireless segment is expected to benefit from its post-paid business. This is because the business continues to enjoy solid subscriber addition. Significant investments in network coverage, customer retention, lucrative data plans and the launch of handsets along with the provision of net protection are expected to boost customer addition. Also, this Zacks Rank #3 (Hold) company has outperformed the industry it belongs to. The stock has gained 2.4% in the past six months against the industry’s decline of 6.3%.

Moreover, 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.

However, the company is grappling with stringent regulatory norms, price competition as well as operational risks. Also, the company’s local line access for traditional telephony service has been declining due to higher wireless substitution and migration to IP-based services.

Key Picks

Some better-ranked stocks from the same space are Telephone and Data Systems, Inc. TDS, Frontier Communications Corporation FTR and Ameren Corporation AEE. While Telephone and Data Systems sports a Zacks Rank #1 (Strong Buy), Frontier Communications and Ameren Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Telephone and Data Systems surpassed estimates twice in the preceding four quarters, with an average positive earnings surprise of 88.80%.

Frontier Communications exceeded estimates in the trailing four quarters, with an average positive earnings surprise of 23.64%.

Ameren Corporation outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 7.69%.

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