Pay Less for Inflation-Beating Gains With BCE Inc. (USA)
December 06, 2017 – by Richard Band
BCE Inc (USA) (NYSE: BCE) is part of the Robelus triumvirate that runs most of the telecom business in Canada.
While this trio, by its size and influence sometimes engenders a bit of friction from consumers in the Great White North, the fact is these three deliver quality telecommunications to all of Canada and BCE and RCI have moved into other business ventures as well.
Much like some of its telecom colleagues in the U.S., BCE is also moving beyond wireline and wireless phones services. It has also built a strong portfolio of television and radio stations around Canada, which has strong telecom roots but allows for new sources of revenue that aren’t as tightly regulated as they are on the telecom side.
What’s more, in early November, BCE announced that it was buying AlarmForce Industries Inc for CAD 166 million. AlarmForce is one of the largest home security companies in Canada and comes with a subscriber base that tops 130,000 subscribers. That’s about 2.7% of Canada’s entire population.
But some of those subscribers for home, business and medical security systems are also in the U.S. About a decade ago, AF began moving into U.S. markets and now has customers in North Carolina, Ohio, Minnesota, Florida and Georgia.
While U.S. operations haven’t been the growth market AF had hoped, BCE can certainly use these tendrils into the U.S. market to its advantage.
The next opportunity BCE is looking to exploit in its buyout of AF is the smart building trend that’s just beginning. Looking at the AF site, you notice first and foremost a Google Home sitting on a coffee table.
BCE sees the merger as a way to start to build out an integrated smart home and smart office customer base using some of the best potential subscribers you could find — people that already have wired their houses and offices with security devices.
The ability to integrate more services into the equipment it supplies to these customers is much less costly than going out and finding new customers.
Bottom Line on BCE Stock
One of the fundamental rules of sales is it’s always much cheaper to keep a customer than it is to acquire a customer. BCE now has a customer base that it can upgrade to more comprehensive smart systems and use all that marketing data to then expand its smart building systems around Canada, and even into the U.S. market.
This may not happen in the next quarter or two, but the fact is, BCE is a solid player that continues to look for new opportunities to expand its business using its core competencies as its infrastructure.
BCE stock won’t set the world on fire, but its 12% year-to-date return and reliable 4.6% dividend certainly make it a great foundational pick that adds some diversity to U.S.-based telecoms.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.