Executive Summary
BCE Inc . (NYSE:BCE) presented its Q1 2025 results on May 8, 2025, highlighting a strategic push into the U.S. fiber market through the acquisition of Ziply Fiber, while reporting mixed financial performance. The company posted a 1.3% year-over-year revenue decline to $5,930 million, but saw substantial free cash flow growth of 838.8% to $798 million. BCE also announced a significant shift in its dividend policy, targeting 40%-55% of free cash flow, down from the previous 65%-75% range, while maintaining an annualized dividend of $1.75 per share.
The telecommunications giant is trading near its 52-week low, closing at $21.25 on May 7, 2025, down 1.57% for the day, with after-hours trading showing a slight recovery of 0.94% to $21.45.
Strategic Initiatives
BCE outlined four key revenue growth drivers that form the foundation of its strategic roadmap: putting the customer first, offering the best networks and services, business technology solutions leadership, and building a digital media and content powerhouse.
As shown in the following strategic priorities chart:
The company’s most significant strategic move is its expansion into the U.S. fiber market through the acquisition of Ziply Fiber and a partnership with PSP Investments to create Network FiberCo. This initiative aims to position BCE as a leading fiber provider in North America, with potential for up to 16 million combined fiber locations.
The partnership structure gives BCE 49% ownership of Network FiberCo, with PSP Investments holding 51%. This arrangement is designed to provide cost-efficient expansion of BCE’s U.S. fiber footprint.
As illustrated in this partnership structure diagram:
BCE expects this strategic move to significantly enhance its position as a top fiber provider in North America, combining its existing Canadian operations with new U.S. assets:
The company highlighted several benefits of this U.S. expansion strategy, including improved free cash flow profile by over $1 billion from 2026 to 2028, and expected investment returns exceeding 20%:
Quarterly Performance Highlights
BCE’s Q1 2025 financial results showed mixed performance across key metrics. While revenue declined 1.3% year-over-year, adjusted EBITDA remained relatively stable with only a 0.3% decrease, resulting in a margin improvement of 0.4 percentage points to 43.1%. Net earnings surged 49.5% to $683 million, with statutory EPS up 54.5% to $0.68, though adjusted EPS declined 4.2% to $0.69.
The consolidated financial results are detailed in the following table:
By segment, Bell Communication & Technology Services (BCTS) reported a 2.4% revenue decline to $5,246 million and a 2.0% decrease in adjusted EBITDA to $2,399 million. However, the segment’s adjusted EBITDA margin improved by 0.2 percentage points to 45.7%, reflecting disciplined subscriber acquisition and cost-saving initiatives.
The segment performance is illustrated here:
In contrast, Bell Media delivered strong results with revenue increasing 6.9% to $775 million and adjusted EBITDA surging 35.9% to $159 million. This performance was driven by digital revenue growth of 12% year-over-year, with digital now comprising 43% of Bell Media’s total revenue.
Bell Media’s performance metrics are shown below:
Digital Transformation
BCE’s digital transformation strategy is showing significant progress, particularly in its media business. The company reported 3.8 million Crave subscribers in Q1, representing 22% year-over-year growth, and set an ambitious target of reaching 6 million subscribers by 2028.
The digital media strategy and results are highlighted in this slide:
On the business technology front, BCE launched a new tech services division under the "Ateko" brand, bringing together FX Innovation, CloudKettle, and HGC Technologies. This division focuses on IT workflow automation and cybersecurity, with the goal of growing business technology solutions revenue from approximately $250 million today to $1 billion by 2030.
Capital Allocation Strategy
BCE presented a balanced capital allocation strategy focused on three main pillars: optimizing the balance sheet, investing for growth, and returning capital to shareholders. The company emphasized its intention to accelerate deleveraging and optimize its cost of capital.
The capital allocation framework is illustrated here:
In response to economic uncertainty, inflationary pressures, and a challenging regulatory environment, BCE updated its long-term common share dividend payout policy to target 40%-55% of free cash flow, down from the previous 65%-75% range. The company maintained its annualized common dividend of $1.75 per share.
BCE also increased its cost savings target through business transformation initiatives, aiming for $1.5 billion in savings by 2028, up from the previous goal of $1 billion:
Forward-Looking Statements
For 2025, BCE reconfirmed its financial guidance, projecting revenue growth between -3% and 1%, adjusted EBITDA growth between -2% and 2%, capital intensity of approximately 14%, adjusted EPS growth between -13% and -8%, and free cash flow growth between 11% and 19%.
The company noted that these guidance ranges do not reflect the pending Northwestel divestiture and exclude the Ziply Fiber acquisition, which is expected to close in the second half of 2025.
BCE’s fiber-first strategy continues to show progress, with fiber locations increasing 53% from 5.1 million in 2019 to 7.8+ million in Q1 2025, and fiber-to-the-home subscribers growing 110% from 1.4 million to 3.0 million over the same period:
As BCE navigates a challenging market environment characterized by economic uncertainty, inflationary pressures, and aggressive competitive pricing, its strategic focus on U.S. expansion, digital transformation, and cost optimization aims to create long-term shareholder value while maintaining financial stability.
Full presentation:
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