Bell (BCE.TO) Is Continuing To See Strong Growth and Why You Should Consider Adding It To Your Portf...

Investment Analysis of BCE Positive operating revenues 6% growth in product revenue from increased sales of premium mobile phones and business telecom data equipment 1% decline in service revenue due to year-over-year declines in wireless roaming, media advertising and business customer spending on wireline services 3% decrease in net earnings, due to “higher severance, acquisition and other costs as well as higher depreciation and amortization expenses”. Extremely high percentage change in cash flows from operating activities, compared year-to-year. For accelerating the rollout of Bell’s broadband fibre and Wireless Home Internet networks and the expansion of mobile 5G. Extremely high percentage change in capital expenditures with a 30.2%, Higher cash from working capital and lower income taxes 8 % increase in free cash flow to $940M, compared to $611M Q1 in 2020. Higher cash flows from operating activities What Is BCE’s Business Model? BCE Inc., a telecommunications and media company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. It operates in three segments: Bell Wireless, Bell Wireline, and Bell Media. The Bell Wireless segment offers wireless voice and data communications products and services. The Bell Wireline segment provides data, including Internet access and Internet protocol television; and local telephone, long distance, and other communications services and products. This segment also buys and sells local telephone, long distance, data, and other services from or to resellers, and other carriers. The Bell Media segment provides conventional TV, specialty TV, pay TV, and streaming services; and digital media, radio broadcasting, out-of-home advertising services. It owns and operates approximately 30 conventional TV stations; 29 specialty and four Pay TV channels; three direct-to-consumer streaming services; 109 licensed radio stations; and websites. The company was formerly known as Bell Canada Enterprises Inc. BCE Inc. was founded in 1880 and is headquartered in Verdun, Canada. Bell Is Partnering with Honda and Improving Internal Operations Bell Wireless One of the key business developments is the launch of TSN 5G view/vision 5G RDS. TSN and RDS launched TSN 5G View / Vision 5G RDS, “an exclusive in-app feature that leverage Bell’s Fifth Generation (5G) network” (Q1 2021 Shareholder Report). It was first introduced in Montreal and Toronto in 2021, aims for providing a stable connection between Montreal Canadiens and Toronto Maple Leads fans so that they can have view a game from every angel on their smart devices. According to the company’s future outlook for 2022, it will continue to expand this service to more “sports events, teams and venues over time”. Another key business development is the company has successfully connected a car partnership with Honda Canada on March 11, 2021. Basically, the new Honda and Acura vehicles are now equipped with built-in Wifi hotspots that enable drivers and their passengers to stay fully connected online. This service is idea for mobile workers, commuters and families, supporting real-time email and txt access, video steaming, gaming, web browsing, and keeps customers devices connected up to 50 feet away from the vehicle, according to the company. Starting Jan. 1, 2021, the company changed its wireless operating metrics. Basically, the company updates its reporting rule into 2 categories, mobile phone subscribers units and mobile connected device subscriber units (tables, wearables and mobile Internet devices). Besides that, the company reorganized its previously undisclosed IoT units (connected telematics services, monitoring devices, connected cars and fleet management solutions) to mobile connected device subscribers. Personally, I think such reorganization will improve the company’s internal efficiency and productivity. Also, it will boost the company’s operating revenue, which makes the financial statement looks more impressive. This change shouldn’t affect the fundamentals of the company. Highlights The Bell Wireless operating revenue increased by 3.2%, compared to Q1 2020 Service revenues declined by 2.1%, due to lower postpaid revenues (decreased outbound roaming revenues due to less travelling, lower data overages as greater customers adoption of monthly plans with higher data thresholds) Higher prepaid revenue (continued growth in mobile phone subscriber base, the flow-through of rate increases) Product revenues increased by 20.1% in Q1, 2021, compared to Q1 2020, due to greater sales mix of premium mobile phones and higher handset prices, along with increased consumer electronic sales Bell Is Partnering with the Federal and Local Government to Accelerate the Expansion of 5G in Quebec, Canada Bell Wireline The company reaffirmed its plan to accelerate the deployment of high-speed Internet in Quebec to connect all Quebecers by September 2022. On March 22, 2021, the company announced the rollout of high-speed Internet services to areas of Quebec with 100% fibre Internet connections to approximately “31,000 homes and businesses in nearly 100 Quebec communities”. (Data from the company) Besides partner with the federal and Quebec governments for accelerating the deployment of high-speed Internet in Quebec, the company also partnered with SCALE AI, a Montreal-based investment and innovation hub, by using AI to increase productivity and efficiency. Highlights Bell Wireline operating revenues increased by 1.5% in Q1 2021, compared to Q1 2020 due to higher data service revenues, increased product sales and other services. Operating product revenues increased by 14.1% in Q1, 2021, compared to Q1 2020, due to higher demand in the business market, particularly from greater sales to the government sector. Adjusted EBITDA margin maintained stable 44.2% Total retail TV net customer losses improved by 50.9% in Q1 2021, compared to Q1 2020, due to improvement in IPTV net activations with fewer satellite TV net customer losses. Bell Is Partnering with Noovo for Business Expansions Bell Media Bell Media expanded its digital offering available on the Noovo.ca website and via the brand-new Noovo app, showcasing its extensive catalogue of French-language programming. It offers a variety of viewpoints that provide context to daily news stores, while analyzing them from a concrete and grounded perspective. Highlights Bell Media operating revenues declined by 5.2% in Q1 2021, compared to the same period last year, due to lower advertising revenues. Adjusted EBITDA decreased by 7.7% in Q1 2021, compared to the same period last year, driven by lower revenues in advertising. Is Bell (BCE.TO) A Good Investment for Your Portfolio?  From above, we can see that BCE is a company with a huge potential in the future. Its financial status is healthy enough to support the company to continuously expand its market segments. With more deployment and installment of 5G, the company will gain more advantages over its competitors, although others have also been expanding businesses into 5G. More importantly, the company increased the cash dividends paid on common shares to $0.8325 (quarterly) per common share, compared to $0.7925 per common share in the same quarter last year. Investors who earn money based on dividends should definitely pay more attention to this company as I predict the growth of dividends will continuously grow in the future due to the company’s ability to generate revenue and to expand its market share in the future.  With the timely distribution of effective vaccines and treatments and the potential development and distribution of vaccines and treatments, the company forecasts a 2%-5% revenue and adjusted EBITDA growths. By the next quarter, the company expects to generate $2,850M - $3,200 M free cash flow, which is almost tripled compared to this quarter’s ($900 M). Definitely, the company will become better as the pandemic goes away, however, the company also mentions the potential risks due to the uncertainties of the virus. The company worries about the prevalence of new variants that are more contagious and may lead to increased health risk, which could possibly impact the company’s business further. Personally, I think the effect of the new variant on people’s daily life is minor since people are known about the new variant and have preparation ready. More city lock-down is very unlikely to happen. The company was conservative when making the statement so investors and the market will be informed beforehand. Therefore, I do expect the company will beat the market expectation again, which will further boost the stock price upward. Summary of Why BCE Is a Good Investment The continued growth of the prepaid subscriber base Increase deployment of 5G wireless network national-wide to gain more competitive advantage and market share Continued expansion of more 5G and LTE Advanced devices and new data services Constant growth in retail Internet and IPTV subscribers