Christine Poole BCE Inc. BCE-T TOP PICK Sep 20, 2022

He was very disappointed when they bought Ziply. They should have bought back shares. Makes sense to slash their dividend. They should focus on what they do well, including media assets. Expectations among investors are now very low. Things could change, but we're now at maximum pessimism.

Become differentiated when you drill into the metrics. Both suffering from credit downgrades. Took on a lot of debt for 5G buildout, but weren't able to increase pricing. Number of immigrants has slowed. Lots of price competition, just as elsewhere in the world.

In last quarter, Telus increased dividend. Less risky than BCE right now. Debt/equity ~150%, so not as much onus on debt repayment as for BCE. Has potential of other operations like TIXT and Telus Health, so it's doing other things outside of just telecom; appears to be promising growth, but we'll see.

In last quarter, BCE cut dividend. Debt/equity is at 200%.

Hasn't liked some of the decisions. Hasn't sold or added. Historically once you get a material dividend cut, that ekes out the last bit of selling. Probably close to a bottom right now. Still, you need a catalyst to take it over the top and start the recovery.

Nibble or accumulate. Doesn't see a catalyst for this to take off to the upside. There was a bump after the cut, but then it dropped right back down. Tells you that a catalyst is lacking. Be cautious.

Dividend cut was the right thing to do and stabilized the stock. Business model facing lots of challenges right now. Lots of competition on satellites and mobile. Revenues aren't growing. Looking for alternatives to break into broadband in the US, doesn't seem a smart decision. Wants to see asset sales and debt paid down. Hard to see a catalyst. He owns no telcos now.

Now is probably the time to buy if you want to take a position. At $30 it is reasonably cheap. He likes the dividend cut which gives it financial flexibility and the opportunity to pay down debt. The dividend is still quite high at 6% and is stable. Market fears are somewhat overblown. The three year view should be better. He owns Rogers.

Whole telecom space has been challenged, partly because of increased competition. No outlets to grow outside Canada. Profitability will be flat for some time. People own these names for the income. Rogers' purchase of Shaw gives it an edge on cost-cutting. Telus is the best operator. Rogers has the lowest dividend yield of the group.

Steer clear of the space. Even with an income stock you do want some growth, as it helps offset valuation risk elsewhere in the business.

She has no exposure to telcos, too competitive. Cut dividend, which will help preserve cashflow and balance sheet. But probably means dividend won't be raised anytime soon. Still questions about fibre strategy in US, which is also a very competitive market. Move on.

This pick was before the sale of MLSE to Rogers and before the acquisition of Ziply. The yield was 10%, over the worst of fibre capex, and lower interest rates would help. She figured it had so many assets, that any of them could be sold to fix the balance sheet and alleviate investor concerns.

She still owns it, buying more around $30. Eventually, asset sales can help. In a recession, defensive plays are a positive trend for telcos.

He quoted from a technical analyst: "Nothing good happens below the 200 day moving average". Its dividend is 5.7% and the payout ratio is 45%. Earnings are expected to be down this year and the next. In general telcos are in a very competitive business and have very high debt to equity. They have some unused or little used assets. There are better risk adjusted returns elsewhere.

It is turning around with the chart turning positive. There's a big catch-up trade to be had. The next resistance level is $42. It's the laggard among the big three telcos.