BCE's Q1 Earnings Top Despite Lower Revenues, Stock Gains on PSP Deal

BCE Inc. BCE reported first-quarter 2025 adjusted earnings per share (EPS) of C$0.68 (48 cents) compared with C$0.44 in the prior-year quarter. The figure topped the Zacks Consensus Estimate of 44 cents.

Quarterly total operating revenues dipped 1.3% year over year to C$5,930 million ($4,131 million). The top line lagged the consensus estimate of $4,222 million. The contraction was due to a 7.4% drop in product revenues to C$758 million and a 0.4% dip in service revenues to C$5,172 million, with declines at Bell CTS partly offset by gains at Bell Media.

BCE announced a transformational partnership with the Public Sector Pension Investment Board (PSP Investments). This agreement focuses on accelerating fibre infrastructure development in underserved U.S. markets through Ziply Fiber, with PSP potentially committing more than $1.5 billion. This deal positions BCE for growth in the U.S. fibre broadband space, reduces capital burden through external funding and supports free cash flow and future strategic investments.

BCE’s shares went up 4.6% in trading and closed at $22.23 on May 8, 2025, owing to the announcement of a major U.S. fibre infrastructure partnership with PSP.  Shares of the company have lost 34.5% in the past year compared with the Zacks Diversified Communication Services industry's decline of 5.8%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Segmental Results

Bell CTS’ operating revenues went down 2.4% year over year to C$5,246 million, due to soft demand trends across both service and product revenues.

Within the Bell CTS segment, Service revenues fell 1.5% to C$4,488 million due to declines in legacy services (voice, satellite), aggressive promotions and price competition, and lower average revenue per user (ARPU). However, growth in mobile, Internet and IPTV subscribers, stronger enterprise service sales and acquisitions like Stratejm, CloudKettle and HGC Technologies helped offset some losses.

Product revenues declined 7.4% year over year, primarily due to reduced mobile device sales to government sector clients, along with the closure of The Source stores and shift to Best Buy Express. This was partially balanced by increased consumer wireless device sales, driven by more upgrades and contract activations, though tempered by higher discounting.

BCE, Inc. Price, Consensus and EPS Surprise

BCE, Inc. price-consensus-eps-surprise-chart | BCE, Inc. Quote

Postpaid mobile phone net subscriber losses were 9,598 against net activations of 45,247 in the prior-year quarter. The decline was due to a 12.7% fall in gross subscriber activations due to a softer market, slower population growth from immigration policies and a shift toward higher-value subscriber additions.

Prepaid customer base surged by 9,002 in the first quarter, improving from a net loss of 20,039 in the prior-year quarter. Mobile phone prepaid churn rose slightly by 3 basis points to 5.77%, but improved overall due to a 5.5% rise in gross activations, driven by a market shift from postpaid discount brands to prepaid services and broader retail distribution.

Bell Media revenues grew 6.9% year over year to C$775 million, boosted by higher advertising and subscriber revenues. Total digital revenues rose 12%, driven by Crave and sports streaming growth and higher digital ad revenue from Crave and Connected TV.

Other Details

Adjusted EBITDA in the reported quarter remained flat year over year to C$2,558 million, with a 2% fall at Bell CTS, partly offset by a 35.9% rise at Bell Media. The adjusted EBITDA margin was 43.1% compared with 42.7% in the prior-year quarter.

Cash Flow

BCE’s operating cash flow rose 38.8% year over year to $1,571 million, driven by better working capital and lower taxes, partly offset by higher interest payments.

Free cash flow was $798 million, up from $85 million in the prior-year quarter, driven by higher operating cash flows and lower capital expenditures, excluding acquisition costs.

2025 Outlook Reiterated

Despite the challenges, BCE reaffirmed its full-year 2025 financial guidance. The guidance does not reflect the pending Ziply Fiber acquisition or the Northwestel divestiture, both expected to be finalized in the second half of 2025.

For 2025, management continues to anticipate revenue growth of (3%)-1%. Adjusted EBITDA is expected to grow in the (2%)-2% band. BCE expects lower capital spending to boost free cash flow, in the range of 11-19% growth. 

Management decided to adjust the annual dividend to C$1.75 per share from C$3.99 earlier, reinforcing the balance sheet while preserving flexibility amid economic uncertainty.

Adjusted EPS growth is likely to range between (13%) and (8%).

BCE’s Zacks Rank

BCE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

Badger Meter, Inc. BMI reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.

In the past year, shares of BMI have gained 18.8%.

Cadence Design Systems CDNS reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.

Shares of Cadence have gained 9.6% in the past year.

Woodward, Inc. WWD reported second-quarter fiscal 2025 adjusted net EPS of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.

In the past six months, shares of WWD have gained 13.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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