BCE Reports Growth in Q4 Earnings, But Faces Challenges in 2025 Forecast
BCE Inc. has posted impressive earnings in the fourth quarter of 2024, reporting higher profits compared to the previous year. Despite this positive quarterly performance, the company is bracing for a more challenging 2025. Let’s break down the numbers and what they mean for BCE’s future.
For the three-month period ending December 31, BCE saw its net earnings rise by 16%, amounting to $505 million, or 51 cents per share, up from $435 million, or 42 cents per share, in the same quarter of 2023. This growth in profit was largely driven by an improvement in its EBITDA (earnings before interest, taxes, depreciation, and amortization), which reached its highest level in decades. However, its revenue for Q4 slipped slightly by 0.8%, totaling $6.42 billion compared to $6.47 billion a year earlier.
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Despite these positive results, the company acknowledged significant challenges ahead, particularly in the competitive wireless and broadband sectors. BCE expects 2025 to be a year of lower earnings growth, with revenue forecasts ranging from a 1% increase to a 3% decline. Furthermore, the company anticipates a decrease in adjusted earnings per share of 8% to 13%, as it faces continued pricing pressure and higher costs in areas such as media expenses and interest rates.
The company’s CEO, Mirko Bibic, cited several factors contributing to this cautious outlook, including high competition, lower immigration rates, and reduced housing starts, which have all added pressure to the telecommunications market. Additionally, BCE added only 56,550 postpaid wireless customers during the fourth quarter, a substantial drop of 56% compared to the 128,715 customers added during the same period last year. Analysts had expected the company to add around 64,000 customers, further highlighting the slowdown in subscriber growth.
On a brighter note, BCE’s broadband internet business continues to perform well. It added 34,187 internet connections, although this was still lower than the 56,000 added in Q4 of 2023. Internet revenues grew by 3.4%, reflecting the company’s solid position in the broadband space. The company’s media revenue also showed modest growth, increasing by 1.2%, with a greater share coming from digital channels compared to traditional TV and radio.
One area where BCE remains strong is its dividend policy. Despite some analysts suggesting a reduction in dividends to strengthen its financial position, BCE is maintaining its payout at $3.99 per share for 2025. The company has been paying out more in dividends than it earns in free cash flow, leading to concerns about sustainability, but the 11% dividend yield remains attractive to retail investors.
Looking ahead, BCE has also guided that its free cash flow will grow between 11% and 19% in 2025, and the company will continue focusing on operational efficiencies to help offset the pressures on its business. Although the company remains confident in its ability to generate cash flow, the challenging market conditions may limit its ability to achieve substantial growth in the year ahead.
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