BCE INC. (Toronto symbol BCE; www.bce.ca) is Canada’s largest provider of telephone, Internet and wireless services. It also sells satellite TV services across the country. The company continues to benefit from strong demand for wireless and high-speed Internet services. That’s a big reason why the stock is up 31% since 2008. BCE has invested heavily in expanding its media operations, which include the 28-station CTV Television Network, 30 specialty channels and 33 radio stations. BCE now hopes to complete its $3.0-billion purchase of Astral Media by June 1, 2013. Montreal-based Astral owns 22 TV stations, 84 radio stations and popular specialty channels like The Movie Network and Teletoon. To gain regulatory approval, BCE has restructured its deal for Astral. [ofie_ad]
Canadian dividend stocks: Astral deal has competition bureau OK but awaits CRTC approval
In November 2012, the Canadian Radio-Television and Telecommunications Commission (CRTC) rejected the takeover, as the purchase would have given BCE an overwhelming share of Canada’s English-language TV market. BCE has now agreed to sell six of Astral’s specialty TV channels and two Ottawa radio stations to Corus Entertainment (Toronto symbol CJR.B) for $400.6 million. Following these sales, BCE will control 35.7% of the English language TV market, up 2.0% from its current share. It will also have 23.0% of the French language TV market, which is still well below its main competitor’s 30.5% share. Canada’s competition bureau has already approved the Astral purchase. However, the takeover still needs the CRTC’s consent. Income-seeking investors like BCE for its high 5.0% dividend yield. The stock trades at 15.6 times its likely 2013 earnings of $3.01 a share. In the latest edition of The Successful Investor, we look at the risk of BCE’s exposure to cyclical advertising revenues with its media purchases. We also look at how well positioned the company is to compete with services like Netflix and Apple TV that use the Internet to sell movies and other programming. We conclude with our clear buy-sell-hold advice on this stock. (Note: If you are a current subscriber to The Successful Investor, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members Do you believe the addition of Astral, a major TV service, adds to the appeal of a major telecom stock like BCE, by giving it greater diversity? Or do you think stiff competition and rapid advances in technology make the whole field of Internet, wireless and TV services a risky one for the foreseeable future? Let us know what you think.
