BCE at 4.5x Earnings|Priced Like Its Still 2025

BCE's Discount Nobody Explains

BCE trades on the Toronto Stock Exchange at a price to earnings ratio of four point five times, while the average telecom stock changes hands near seventeen times. That gap alone would normally scream broken business, yet BCE just posted four percent revenue growth and a two point nine percent rise in adjusted EBITDA.

The scar tissue is real: in May twenty twenty five, BCE slashed its annual dividend by fifty six percent, from three dollars ninety nine cents to one dollar seventy five cents per share. Investors who lived through that cut still price BCE like the crisis that caused it is still running, even though the numbers describing that crisis have already changed.

So the real question is not whether BCE is cheap, the four point five times multiple already answers that. The question is whether the fee fight still unfolding at Canada's telecom regulator, the CRTC, is the reason the market refuses to update its price.

Two Analysts, One Stock, Opposite Calls

Two research desks looked at the exact same BCE within forty eight hours of each other and reached opposite conclusions. On July fifteenth, Desjardins Securities issued a buy rating on BCE with a forty three dollar fifty cent target.

The next trading day, Raymond James initiated coverage with a market perform rating and a lower thirty seven dollar target. Same balance sheet, same dividend history, same regulatory overhang, yet one desk sees room to run and the other sees a stock that has already priced in its own fix.

The root of the split traces back to twenty twenty, when BCE poured capital into a fibre network buildout while interest rates sat near zero. Rates then rose, Quebecor's Freedom Mobile ignited a wireless price war, and the CRTC ordered BCE to share its fibre lines with smaller rivals, squeezing the margin on infrastructure BCE had already paid to build.

That combination is what forced BCE's payout above one hundred percent of free cash flow before the cut, and it is exactly what the Raymond James caution and the Desjardins conviction are now arguing about. Whichever desk is closer to right depends on whether that regulatory squeeze is easing or still tightening.

The Yield That Lies, and the Yield That Doesn't

Set BCE beside its closest domestic peer, TELUS, and the comparison looks lopsided in TELUS's favour at first glance. TELUS yields close to ten percent versus BCE's roughly five percent, and TELUS posted nineteen percent free cash flow growth in the first quarter.

But TELUS froze its own dividend growth in December twenty twenty five specifically to delever, and its net debt to EBITDA still sat at three and a half times in March, above its own three times target for the end of twenty twenty seven. The buried assumption behind chasing the bigger TELUS yield is that a frozen, still-deleveraging payout carries the same risk as a cut-and-reset one.

BCE already took its dividend pain in twenty twenty five, dropping its payout ratio to under fifty percent of free cash flow and scrapping the discounted share-issuing reinvestment plan that had been diluting holders. The stock optically offering the worse yield is the one that has already finished restructuring; the stock offering the better yield is the one still promising to.

What Actually Flips This Trade

Inside BCE's own numbers sits the one growth line that does not depend on the CRTC ruling either way. Bell Business Markets, the unit selling artificial intelligence and cybersecurity solutions, grew revenue nine point seven percent last quarter, and that is the segment BCE is now leaning on to argue its turnaround is structural rather than accounting.

The nearer-term test is not BCE's next full earnings date, it is whether that Bell Business Markets growth rate holds and whether the payout ratio stays under fifty percent when BCE next reports, since either slipping would validate the Raymond James caution over the Desjardins call. A holder watching for a trim signal should watch that payout ratio number specifically, not the headline dividend yield.

For someone still on the sidelines, the trigger is the CRTC's still-open proceeding on wholesale fibre fees. A ruling that eases the fee burden confirms the four point five times multiple as a genuine mispricing and turns this into an entry setup, while a ruling that tightens fee-sharing terms further would validate the market's current skepticism and turn the cheap multiple into a value trap instead.

Either way, the signal to track is not BCE's price, it is which side of the CRTC's fee decision the company ends up on. That single ruling, more than any further dividend history, decides whether the discount closes or persists.