BCE Shares Tumble After Issuing Cautious 2026 Outlook
BCE Inc., Canada's largest telecommunications provider, experienced a significant stock price decline following the release of its fourth-quarter financial results and 2026 guidance. While the company surpassed analyst expectations for earnings, concerns about revenue performance and soft organic growth projections triggered investor sell-off.
Mixed Financial Performance in Q4 2026
The telecommunications giant reported adjusted earnings of 69 Canadian cents per share for the fourth quarter, exceeding the 62 cents forecast by analysts surveyed by Bloomberg. This positive earnings surprise was driven by improved wireless subscriber retention and operational efficiencies.
Net earnings showed substantial improvement, rising to $632 million from $505 million during the same period a year earlier. However, revenue of $6.4 billion came in slightly below market estimates, creating concern among investors about the company's growth trajectory.
Market Reaction and Stock Performance
BCE shares dropped as much as five percent in early trading on the Toronto Stock Exchange, marking the most significant intraday decline since October. Although the stock recovered some ground throughout the trading session, it ultimately closed 2.6 percent lower at $35.03.
Analysts attributed the market reaction to several factors, including what appeared to be limited organic improvement in projected year-over-year growth for earnings before interest, taxes, depreciation, and amortization (EBITDA). Jerome Dubreuil, an analyst at Desjardins Securities, noted that the stock's recent outperformance may have made it particularly sensitive to any guidance perceived as conservative.
2026 Guidance and Strategic Direction
BCE provided guidance for the current year that projected revenue growth between one and five percent, a notable improvement from the 0.2 percent growth recorded in 2025. The company anticipates this growth will be driven by several factors, including increased artificial intelligence-related services for businesses, higher wireless pricing, and stronger wireless product sales.
However, the EBITDA growth guidance of zero to four percent, following a 0.7 percent gain in 2025, appeared to disappoint investors looking for more robust expansion. CEO Mirko Bibic emphasized that the company continues to execute on its multiyear plan presented at its October investor day and has aggressively developed an AI strategy to complement its core business operations.
Wireless Performance and Competitive Landscape
BCE's wireless unit added just over 56,000 net postpaid subscribers during the quarter, representing a decrease of approximately one percent compared to the same period last year. The company faces challenges from immigration curbs that have reduced the pool of potential customers available to telecommunications firms.
Bibic acknowledged competitive pressures in the market, noting that while BCE hoped to show moderate growth in average revenue per user by the fourth quarter of 2026, aggressive discounting by competitors in recent months has made this goal more challenging to achieve. "With the pricing we saw in December of 2025, and what we've seen some of our peers do in January, it might be more difficult to get there, but there's still 11 months left in the year," Bibic told analysts during the earnings call.
AI Strategy and Future Growth Drivers
The company highlighted significant progress in its artificial intelligence initiatives, with AI-powered solutions revenue increasing 31 percent year-over-year in the fourth quarter. Bibic noted that most of this growth was organic, driven primarily by BCE's Ateko offering, which helps customers automate AI platforms, and Bell Cyber services.
BCE's Bell AI Fabric network represents a key component of its growth strategy, including the development of data centre facilities to support expanding AI services. Bank of Nova Scotia analyst Maher Yaghi observed that BCE has achieved "meaningful" improvement in wireless customer churn, suggesting that management's focus on premium and converged customer loading, despite requiring some discounts, represents the optimal long-term strategy for the company.
The telecommunications firm continues to navigate a challenging competitive environment while investing in next-generation technologies to drive future growth, though investors remain cautious about the pace of this transition based on the market's reaction to the latest guidance.
