Here's Why BCE (BCE) Is A Promising Pick Despite Losses

On Jun 29, 2017, leading Canadian telephone operator BCE Inc. (TO:BCE) was upgraded by a notch to a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past three months, share price of BCE gained 2.79% while the Zacks categorized Diversified Communication Services industry declined 0.18%.

We are impressed with BCE’s efforts to strengthen itself in the field of advanced networks Fibe TV and Fibe Internet services and in the hosting and cloud suite.

BCE’s subsidiary, Bell Canada, continues to rule the Canadian broadband communications market through the launch of Home Hub 3000 WiFi services with Wireless 4K Whole Home PVR from Fibe TV. Increasing deployment of Gigabit Fibe, 4G LTE mobile networks, IP phone services and post-paid businesses have helped the company gain customers in its post-paid wireless business and put a check on subscriber loss. BCE’s acquisition of Q9 Networks has strengthened its foothold in the cloud space. We further believe that significant investments in network coverage, customer retention, lucrative data plans and the launch of new handsets along with the provision of net protection might have driven customer addition.

The buyout of Manitoba Telecom Services Inc. ("MTS") has helped Bell Canada gain almost 710,000 wireless, Internet and IPTV customers in Manitoba. This lead to a 5% increase in total broadband service subscribers. This positioned Bell Canada as one of the largest mobile providers in Manitoba with more than 470,000 total Bell and MTS wireless subscribers.

However, BCE’s strategic moves to enhance employee skills, increase capital investments and reduce expenditures may impact financial and growth prospects if not executed properly. Moreover, stringent regulatory measures, decline in network access services lines, price competition, exposure to labor union issues covered by collective bargaining agreements leading to work disruptions and higher labor costs, operational risks, and construction and launch delays are major risks. In the wireless segment, BCE competes against the likes of Rogers Communications Inc. (NYSE:RCI) and TELUS Corporation (NYSE:TU) as well as small regional carriers in Canada. In the wireline segment, it competes against Shaw Communications Inc. (NYSE:SJR) .

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