BCE's Q3 Earnings & Revenues Miss Estimates, Fall Y/Y, Stock Down

Core Viewpoint - BCE Inc. reported a decline in adjusted earnings per share and total operating revenues for the third quarter of 2024, reflecting challenges in product revenues and subscriber activations [1][2]. Financial Performance - Adjusted EPS for Q3 2024 was C$0.75, down from C$0.81 in the prior-year quarter, while the Zacks Consensus Estimate was C$0.57 [1] - Total operating revenues decreased by 1.8% year over year to C$5,971 million ($4,377 million), missing the consensus estimate of $4,450 million [2] - Product revenues fell by 14.3% to C$685 million, while service revenues grew by 0.1% to C$5,286 million [2] Segmental Results - BCE combined its Bell Wireless and Bell Wireline segments into a new segment called Bell CTS, which reported a 3.3% decline in operating revenues to C$5,280 million [3] - Within Bell CTS, service revenues decreased by 1.4% to C$4,595 million, while product revenues dropped by 14.3% [4] Subscriber Activations - Postpaid mobile phone net subscriber activations were 333,111, down 76.8% year over year due to increased churn rates [5] - Prepaid mobile phone net subscriber activations rose by 187.3% to 69,085, driven by higher gross activations and improved marketing strategies [6] Media Performance - Bell Media revenues increased by 10.1% year over year to C$782 million, primarily due to a 19% rise in digital revenues [7] Operational Efficiency - Adjusted EBITDA grew by 2.1% to C$2,722 million, with operating expenses reduced by 4.8%, leading to the highest adjusted EBITDA margin in over 30 years at 45.6% [8] Cash Flow and Guidance - Cash generated from operating activities was C$1,842 million, down from C$1,961 million in the prior-year quarter, while free cash flow increased to C$832 million [9] - BCE revised its 2024 revenue guidance from 0-4% growth to a decline of about 1.5% due to lower product revenues [9] - Management maintained other financial targets, expecting adjusted EBITDA growth between 1.5% and 4.5% and free cash flow growth in the range of (3)-(11)% [10]