According to a news article by Morningstar, BCE, a major wireless carrier in Canada, had a strong third quarter with sales and profits on track to meet full-year targets. The company also saw an increase in net customer additions for both wireless and broadband services. However, there were some concerns to note. The wireless customer churn rate rose significantly due to the entrance of Quebecor as a nationwide competitor, and there was also pressure on average revenue per customer (ARPU). As a result, Morningstar adjusted its long-term forecast, slightly reducing its fair value estimate for BCE.
In terms of customer growth, BCE added 143,000 net postpaid wireless phone customers, continuing its trend of strong gains. This growth was likely supported by Canada’s immigration policy, which contributed to high gross additions. Additionally, the company added prepaid customers, indicating that the postpaid strength did not result from customers switching plans. However, there was a slight increase in monthly postpaid customer churn to 1.10%, which is the highest level since the pandemic disrupted typical customer defections.
Furthermore, BCE experienced a decline of 0.8% in wireless ARPU compared to the previous year’s third quarter, although it should be noted that the previous year had particularly strong ARPU. Various factors, including normalized roaming revenue and plan mix, can impact ARPU. While there is not expected to be significant ARPU growth in the next few years due to competitive dynamics, stability is anticipated. Overall, wireless service revenue grew by 4% year over year.
It is important to mention that Morningstar, the author or authors of the article, does not own shares in any securities mentioned.
