BCE Slashes Dividend by Over 50%, Signs Major Ziply Deal with PSP Investments

BCE Inc. has taken a significant step to protect its financial position, cutting its dividend by more than half and striking a new deal with one of Canada’s largest pension funds. The telecom giant, facing economic headwinds, regulatory pressure, and mounting debt, announced the long-anticipated move on May 8, 2025.

Dividend Cut Reflects Financial Reality

BCE is reducing its annualized dividend from $3.99 to $1.75 per common share, or $0.4375 quarterly, citing a need to strengthen its balance sheet and maintain flexibility in a challenging market. Before the cut, BCE’s dividend yield sat at an unsustainable 13%, which had raised concerns among investors.

CEO Mirko Bibic acknowledged the shift, stating the company must adapt to economic changes since late 2024. “We made the appropriate decision to adjust our dividend to support our long-term financial health,” he said in Thursday’s release.

The company has consistently paid out more in dividends than it has earned in free cash flow, while also managing over $30 billion in long-term debt.

Q1 2025 Results: Mixed Signals

Despite the dividend cut, BCE reported higher net earnings in Q1 2025. Highlights include:

• Net earnings of $683 million, up 49.5% from a year ago
• Earnings per share (EPS) of $0.68, up from $0.44
• Adjusted EPS of $0.69, down from $0.72
• Free cash flow jumped to $798 million, up from $85 million
• Operating revenue declined slightly to $5.93 billion from $6.01 billion

These results underline the financial strain from competition, rising costs, and ongoing regulatory uncertainty.

Ziply Deal: New U.S. Growth Path

BCE also revealed a major partnership with PSP Investments to support its U.S. expansion through Ziply Fiber, a company it agreed to acquire in late 2024 for $5 billion.

Under the new deal:

• PSP will invest more than US$1.5 billion to expand Ziply’s fiber network.
• The network is set to grow from 1.3 million to 8 million potential customers in underserved U.S. markets.
• PSP will own 51% of the newly expanded Ziply customer base.
• BCE will retain full ownership of the existing Ziply business.
  

This move allows BCE to reduce its future capital spending, a key investor concern, while pursuing long-term fiber growth in the U.S.

What’s Next for BCE?

BCE’s dual strategy—reining in payouts while pursuing targeted expansion—aims to balance short-term pressures with long-term goals. The company expects to reach a net debt leverage ratio of around 3.5 times adjusted EBITDA by the end of 2027.

As Bibic put it, BCE is now focused on “disciplined execution” and resilience in a volatile market. But with competition intensifying and consumer habits shifting, shareholders will be watching closely to see if these bold moves pay off.

What do you think of BCE’s dividend cut? Is the Ziply deal a smart long-term play or a risky bet?

More…

• https://www.theglobeandmail.com/business/article-bce-cuts-dividend-by-more-than-half
• https://financialpost.com/telecom/bce-cuts-quarterly-dividend-shareholders
• https://www.newswire.ca/news-releases/bce-reports-first-quarter-2025-results-887997232.html