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BCE's Bell Gears Up to Offer First 5G Smartphones in Canada

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Bell Canada, the wholly owned subsidiary of BCE Inc. (BCE - Free Report) , is set to introduce the first 5G-capable smartphone in the country to supplement its nationwide launch of the service. The company announced that Samsung Galaxy S20 5G, Galaxy S20+ 5G and Galaxy S20 Ultra 5G devices will be made available through its offline stores and corporate website, with the first product delivery scheduled in the first week of March.

The Samsung 5G mobile devices are likely to offer customers faster download speed and seamless transfer of data. Becoming the first wireless service provider to officially offer 5G smartphones to local customers is likely to provide competitive advantage to Bell Canada, which operates BCE’s wireline (Bell Wireline) and wireless (Bell Wireless) businesses.

With rapid growth in video and other bandwidth-intensive applications, BCE continues to invest substantially in LTE, broadband and fiber in order to provide additional capacity on Internet and wireless networks. The company is further likely to benefit from healthy postpaid business as it continues to enjoy solid subscriber additions and higher revenue contribution from prepaid services. Significant investments in network coverage, lucrative data plans and launch of new handsets are likely to drive subscriber base expansion.

However, BCE continues to face near-term headwinds that limit its growth potential. The price cap rules introduced by Canada’s regulators are limiting rate increase and reducing the amount that incumbent carriers can charge competitors for accessing their network. As BCE attempts to offset inter-carrier price caps by raising fees of its end users, market dynamics and dictating elasticity have reduced overall demand as customers switch to lower-priced carriers. Moreover, the company’s local line access for traditional telephony service continues to face a decline among large customers due to higher wireless substitution and migration to IP-based services. This is reflected by persistent erosion in overall network access services on a year-over-year basis, hurting revenues of local and long-distance operations.

Nevertheless, BCE is likely to benefit from robust activities in the wireless business, strong subscriber additions, fall in churn rates and focus on technology upgrades. The company continues to concentrate on six strategic areas — investment in broadband network and services, accelerating wireless services, leveraging wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure. These initiatives are expected to generate higher revenue per user and attract new customers.

The stock has gained 12.1% in the past year against the industry’s fall of 28.2%.



BCE currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader industry include Bandwidth Inc. (BAND - Free Report) , ATN International, Inc. (ATNI - Free Report) and Calix, Inc (CALX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bandwidth has long-term earnings growth expectation of 12.9%. It delivered positive earnings surprise of 67.6%, on average, in the trailing four quarters, beating estimates on each occasion.

ATN International surpassed earnings estimates twice in the trailing four quarters, the positive surprise being 143.9%, on average.

Calix has long-term earnings growth expectation of 6%. It delivered positive earnings surprise of 24%, on average, in the trailing four quarters, beating estimates thrice.

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