BCE's Q1 Earnings Top Despite Lower Revenues, Stock Gains on PSP Deal

Core Viewpoint - BCE Inc. reported a strong adjusted EPS growth in Q1 2025, exceeding expectations, despite a decline in total operating revenues and challenges in certain segments [1][2]. Financial Performance - Adjusted EPS for Q1 2025 was C$0.68, up from C$0.44 year-over-year, surpassing the Zacks Consensus Estimate of 44 cents [1]. - Total operating revenues decreased by 1.3% year-over-year to C$5,930 million ($4,131 million), falling short of the consensus estimate of $4,222 million [2]. - Bell CTS segment revenues declined by 2.4% to C$5,246 million, attributed to weak demand trends [4]. Segment Analysis - Service revenues in the Bell CTS segment fell by 1.5% to C$4,488 million, impacted by declines in legacy services and price competition, although growth in mobile and IPTV subscribers helped mitigate losses [5]. - Product revenues dropped by 7.4% to C$758 million, primarily due to reduced mobile device sales to government clients and store closures [6]. - Bell Media revenues increased by 6.9% to C$775 million, driven by higher advertising and subscriber revenues [9]. Subscriber Metrics - Postpaid mobile phone net subscriber losses were 9,598, with a decline in gross activations due to market softness [7]. - Prepaid customer base grew by 9,002, improving from a net loss in the prior-year quarter, with a slight increase in churn [8]. Cash Flow and EBITDA - Operating cash flow rose by 38.8% year-over-year to $1,571 million, while free cash flow increased significantly to $798 million from $85 million [12]. - Adjusted EBITDA remained flat at C$2,558 million, with a margin improvement to 43.1% from 42.7% year-over-year [11]. Strategic Developments - BCE announced a partnership with PSP Investments to accelerate fibre infrastructure development in underserved U.S. markets, with potential commitments exceeding $1.5 billion [3]. - The company reiterated its 2025 financial guidance, expecting revenue growth between -3% and 1% and adjusted EBITDA growth between -2% and 2% [13]. Dividend and Outlook - The annual dividend was adjusted to C$1.75 per share from C$3.99, aimed at reinforcing the balance sheet amid economic uncertainty [14]. - Adjusted EPS growth is projected to range between -13% and -8% for the year [14].