BCE’s share price was under pressure due to a few reasons slowdown in revenue growth while competition is intensifying which requires more capital to invest, and higher interest rates certainly made it more expensive to borrow for leveraged companies overall (including BCE). That said, the competitive landscape for the industry is quite good with only three large players, but the telcos have limited pricing power.
The dividend in FY2023 was $3.7B, which is covered by a cash flow of $7.9B, however, the leverage level is high, net debt/EBITDA of 3.6x. There is a risk of a dividend cut if the operating results do not improve from here. But a cut is not something we would expect. The company has indicated it will still see dividend growth, albeit at a lower rate. Overall, despite the headwinds we would wait for a few quarters for things to improve before moving to something else, as we don’t think BCE’s fundamentals have worsened, just sentiment. Its cost cutting effors announced recently should help.