Research Update: BCE Inc. Outlook Revised To Negative From Stable On Higher Leverage; 'BBB+' Rating Affirmed

Canada-based telecom services provider BCE Inc.'s debt-to-EBITDA ratio (S&P Global Ratings adjusted) weakened to more than 3.5x at year-end 2023, which is beyond our downgrade threshold of 3.25x. We expect adjusted debt levels to increase C$4.3 billion-C$4.6 billion through 2026 amid ongoing investments and a high dividend payout, which together with rising competitive risks could keep debt leverage elevated at the 3.7x area for the next 24 months. BCE management has indicated its desire to reduce leverage by 2026 through noncore assets sales and other corporate initiatives; however, the timeliness and magnitude of these actions is uncertain. As a result, we revised our outlook on BCE and its related entities to negative from stable and affirmed all ratings on the

...- Canada-based telecom services provider BCE Inc.'s debt-to-EBITDA ratio (S&P Global Ratings adjusted) weakened to more than 3.5x at year-end 2023, which is beyond our downgrade threshold of 3.25x. - We expect adjusted debt levels to increase C$4.3 billion-C$4.6 billion through 2026 amid ongoing investments and a high dividend payout, which together with rising competitive risks could keep debt leverage elevated at the 3.7x area for the next 24 months. - BCE management has indicated its desire to reduce leverage by 2026 through noncore assets sales and other corporate initiatives; however, the timeliness and magnitude of these actions is uncertain. - As a result, we revised our outlook on BCE and its related entities to negative from stable and affirmed all ratings on the company, including its '###+' issuer credit rating (ICR). - The negative outlook reflects the risk of a downgrade within the next 12-months if we believe the company is unable to deleverage to the 3.25x area by 2026. We...

Research Update