BCE Broadband & Wireline Prospects Bright, Competition Rife

On Oct 5, leading Canadian telephone operator BCE Inc. (TO:BCE) was upgraded to a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The rating upgrade came on the back of recent developments in the company’s advanced networks Fibe TV and Fibe Internet services along with strength in the hosting and cloud platform.

Focus in Key Areas

BCE continues to focus on six strategic areas including broadband network services, wireless services, wireline momentum, media coverage, customer service and cost structure. Moreover, its focus on technology upgrades which include increased deployment of Gigabit Fibe, 4G LTE mobile networks, upcoming 5G networks, IP phone services and post-paid businesses is sure to boost the top line going ahead.

Growth Prospects

BCE’s wireless segment is expected to benefit from its post-paid business and robust activities 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 provision of net protection will drive customer addition.

Q9 Buyout

In Aug 2016, BCE had announced plans of acquiring the remaining stake of the Internet and data center firm Q9 Networks for $675 million. The acquisition should boost BCE’s cloud suite and services. Notably, BCE had already taken over 35.4% of Q9 Networks for $180 million in Oct 2012 along with four other investors. The transaction is slated to close by the end of 2016.

Competition a Headwind

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. Additionally Shaw Communications Inc‘s (NYSE:SJR) entry into the Canadian wireless market with the takeover of WIND Mobile will exert further competitive pressure on BCE.

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