BCE?

[ExpectedValue]

I was wondering if any board members, particularly any of you in Canada could provide some perspective on BCE?

 

Given the dividend yield and current price, the company looks pretty attractive. It is my understanding that Canada basically allows for a three-way monopoly between BCE, Rogers, and Telus. As a result they have been able to set certain pricing standards which allows them to maintain profitability.

 

I also saw this article from a couple of years ago that said Canada's telcos were more profitable than global peers:

 

http://www.cbc.ca/technology/story/2008/09/04/tech-profit.html

[Uccmal]

I'll take this up Tariq.  I want to stress ahead that I am in no way a technology expert, just a user.  I hold a small amount of BCE that I bought around $26 about a year ago. 

 

Here is the reason:  My family has two Blackberries, Internet Service and a phone line, all with BCE.  I got so irritated paying the company every month that I bought enough shares to offset those expenses with the dividend.  In addition, my employer uses BCE sticks, and BCE cell service, and BCE Blackberry service. 

 

At the moment in Ontario BCE has a wrap on local phone, shares Internet with Rogers, and Cell with Rogers and a few smaller players.  Cell service with BCE is by far the best and can be used all over Ontario. 

 

BCE is a cash flow machine. 

 

This is where my analysis becomes weak.  The government recently auctioned off cell frequencies to other companies who are setting up discount services.  These discount services only work in the urban corridors from say Montreal to Hamilton so are only partial competition to BCE at the moment.  BCE and Rogers have first entry advantage and no matter how irritating they have been in the past people tend to stay with what they know.  The moment the discount carriers, Wind Mobile comes to mind, came on the scene BCE and Rogers and Telus started their own discount brands.  Try competing with that. 

 

The only way they will be unseated is a compelete tech change and the likelihood of that happening so rapidly they will be caught off guard is remote.  As for value, BCe probably is a good long term value but certailnly not a G&D play or even a Buffett buy.