BCE plans to spend $1 billion to double 5G coverage over two years

BCE Inc. logo in Montreal, on May 6, 2010. (Graham Hughes / THE CANADIAN PRESS)

BCE Inc. is launching what executives call the biggest investment program in the company's history as it speeds up plans for its 5G and fibre networks.

The Bell parent company said Thursday it will spend at least $1 billion in the next two years on its network in a move that would double the share of the Canadian population covered by Bell's 5G wireless network.

The extra spending will be funded in part, by the sale of Bell data centres to Equinix.

"This is the right strategic move at the right time for our customers and our company," said chief executive Mirko Bibic in a conference call with financial analysts.

"This will put us in an advantageous competitive position, allowing us to keep growing broadband market share and internet revenue and to begin monetizing 5G services."

BCE also raised its dividend as it reported its fourth-quarter profit rose compared with a year ago. The company says it will pay a quarterly dividend of 87.5 cents per share, up from 83.25 cents per share.

"This represents an emphatic commitment to our dividend growth approach," said Bibic.

The increased payment to shareholders came as BCE reported a profit of $889 million attributable to common shareholders or 98 cents per share. That compared with a profit attributable to common shareholders of $672 million or 74 cents per share in the fourth quarter of 2019.

Operating revenue totalled $6.10 billion, down from $6.28 billion. The company said it expects revenue to grow two to five per cent in 2021.

On an adjusted basis, BCE says it earned 81 cents per share for the quarter, down from an adjusted profit of 86 cents per share a year earlier. Analysts on average had expected an adjusted profit of 76 cents per share, according to financial data firm Refinitiv.

BCE's financial report came on the heels of job cuts at Bell Media. About 210 Bell Media or CTV employees were laid off in Toronto this week, a union said, after Bell said it would also make changes to its radio programming.

Bibic told analysts on Thursday that the plan to make additional investments into its network could create about 5,300 direct and indirect jobs.

Still, executives told analysts that 2021 is a "transition year" towards a return to the company's pre-pandemic financial levels. The company noted that with travel restrictions during the pandemic, it will take a while to return to pre-pandemic levels of roaming fees which are "extremely high margin." The company also said it has been cutting back on promotional offers on mobile phones, with handset subsidies down 14 per cent from last year.

"We're managing costs very tightly," Bibic said.

This report by The Canadian Press was first published Feb. 4, 2021