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No matter how you look at it, 2024 was a dreadful year for Canada’s telecommunications sector.
All the major companies saw their shares tumble as the sector posted a drop of just over 20%. BCE led the way with a stunning decline of 36.13%. Rogers Communications fell 28.76% and Telus lost 17.35%. Only Cogeco was in the black, gaining 13.48%.
To be brutally frank, it was a bloodbath.
It wasn’t supposed to be like this. Telecom stocks tend to be interest sensitive, so the easing policy adopted by the Bank of Canada should have had a positive effect on share prices, for two reasons. First, it helped ease the cost of borrowing for these capital-intensive companies. Second, lower interest rates should have made the stocks’ high dividend yields more appealing to income-oriented investors.
But it didn’t work out that way. The sector was buffeted by several headwinds, including government overregulation, reduced immigration targets (which impacts future growth), and intense competition in the wireless sector from aggressive companies like Quebecor’s Freedom Mobile, which was spun out from the merger of Rogers and Shaw Communications.
Further complicating matters was the unexpected actions of BCE. Despite slow growth, problems in the media division, and high debt that drew the negative attention of credit rating companies, BCE’s directors approved a 3.1% dividend increase, effective with the March 2024 payment. The stock responded by selling off.
With credit agencies downgrading BCE’s rating, the company responded by selling its stake in Maple Leaf Sports and Entertainment to Rogers for $4.7 billion. It was expected the money would be used to pay down debt. Instead, BCE surprised everyone by opting to expand into the U.S. by investing $7 billion in Ziply Fiber. The rationale is that the U.S. is underserved by fibre optic cable, a BCE area of expertise. Investors didn’t like the idea, and the stock fell again to levels not seen since 2009.
The other telecoms had their own problems, with slow revenue growth the leading cause for concern according to a report from RBC Capital Markets released in the week before Christmas. The lengthy analysis projects sector revenue growth in 2025 to be an average of only 1.2%. RBC downgraded its price targets for BCE to $41 from $45, Rogers to $61 from $66, and Telus to $24 from $26. Only Quebecor received an upgrade, from $37 to $39. RBC rates it as “Outperform”.
If this analysis is on target, we should expect another slow year for telecom stocks, with few catalysts for improvement in share prices. Investors seeking capital gains should avoid the sector. Those looking for divided income will be tempted by the current 11.8% yield on BCE, but keep in mind the company has suspended dividend increases and several analysts have called for a cut in the payout.
BCE, Telus, and Rogers are all recommendations of my Internet Wealth Builder newsletter. Here are brief updates on each.
BCE Inc. (TSX: BCE) is Canada’s largest communications company, providing a comprehensive suite of broadband, mobile, landline, and cable communication services to residential and business customers through Bell Canada and Bell Aliant. Bell Media is the company’s multimedia arm, with assets in television, radio, and digital media. Television assets include the CTV television network and many of the country’s most-watched specialty channels.
A year ago, the shares were trading at around $55. Now they’re at $33. That’s a remarkable fall for a high-yielding, blue chip company in a strong market and reflects a broadly-based loss of investor confidence in management.
RBC analyst Drew McReynolds says the closing of the MLSE and Ziply deals in the second half of this year should lead to an “uptick in revenue and EBITDA growth, and greater progress in tracking toward targeted dividend payout and leverage ratios.” But until these catalysts emerge, he sees the stock as relatively range bound.
BCE has become a risky position, with the spectre of a dividend cut overhanging the stock. And investors need to be mindful of the probability that the share price will not significantly rebound in the near future.
Rogers Communications (TSX: RCI.B) is Canada's largest wireless and cable company. The shares are the cheapest they’ve been since 2015. Even though the dividend hasn’t been raised since 2019, the decline in the stock price has pushed up the yield to 4.8%.
RBC’s McReynolds notes that as a result of the pullback in the share price, Rogers stock now trades at a significant discount to its Canadian peers. “With the more compelling valuation, we see an equity reflation story emerging in 2025 driven by FCF (free cash flow) generation and outright debt repayment given the relatively low dividend payout ratio,” he writes.
Although he has lowered his price target to $61, he rates the shares as “Outperform.” If you want to hold a major telecom in your portfolio, Rogers looks like the best choice.
Telus Corp. (TSX: T) is Canada’s second-largest wireless telecom company after Rogers Communications. Its core business includes internet and mobile phone service through the Telus and Koodo brands. The stock is trading at its lowest level since late in 2013, despite the fact it has steadily raised its dividend (now $0.40 a quarter to yield 8.1%).
Mr. McReynolds notes that Telus now trades at a premium valuation compared with the other major Canadian telecoms “suggesting that valuation risk has risen on the stock, particularly in the low revenue growth environment.”
He believes the premium can be maintained (but not increased) if Telus ticks a number of boxes including adjusted EBITDA growth, reducing leverage to the low 3x range, and committing to an annual dividend growth rate for 2026-28 of around 5%. Now is not the time for new purchases.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
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