BCE Reports Good Second Quarter but Underperforms Rogers, and Wireline Disappoints

Similar to Rogers' report last week, BCE’s second-quarter wireless and media results were very strong as the Canadian telecom market is returning to normal. Wireline, which was not hit as hard by the pandemic, doesn’t have the same tailwinds, and BCE’s wireline results were mediocre. We are maintaining our CAD 67 fair value estimate for BCE and believe the stock is close to fairly valued. In our view, Rogers’ business has been much stronger, but its recent network outage has caused concerns that it will now lose share. We think Rogers’ stock overly discounts the extent to which its momentum may turn.