Rogers, Telus, and Bell Hit Hard as Telecom Stocks Tank in 2024

Canadian telecom companies and their investors had a rough 2024, with the S&P/TSX Composite Index posting an 18% gain but the S&P/TSX Capped Communication Services Index, made up of five of the leading telcos in the country, dropping a whopping 20% — reports The Globe and Mail.

What’s more, two of Canada’s largest telecom providers performed worse than in the global financial crisis of 2008.

“Fierce competition for mobile customers suppressed revenue growth. High debt levels persisted or even increased further, in some cases, despite companies’ goals to pay them down. And controversial regulatory decisions created lingering uncertainty over the future of shared networks,” the report noted.

Bell Canada’s parent company, BCE Inc., saw its shares plummet 40% from the beginning of 2024, per data from S&P Capital IQ. The massive plunge is largely attributed to negative investor sentiment over Bell’s $5 billion acquisition of U.S.-based Ziply Fiber and plans for hefty capital expenditures south of the border, alongside a dividend pause and a continuing high payout ratio.

BCE announced a huge third-quarter loss of $1.2 billion in November, significantly slashing its forecasts for the year.

Meanwhile, Rogers Communications Inc.’s shares dipped 29% from January to the end of the year. This was despite the cost synergies the telecom giant achieved following its 2023 acquisition of Shaw Communications, which resulted in the loss of about 3,000 jobs.

Telus, the last and least affected by 2024’s telecom slowdown of the Big Three, experienced a 19% drop in share price since January.

The two remaining members of the S&P/TSX Capped Communication Services Index, Quebecor and Cogeco Communications, fared relatively well in 2024.

Quebecor’s Videotron and newly acquired Freedom Mobile provided fierce competition to telecom incumbents during the year, with the company commanding a respectable 10% market share but pulling an even more impressive 25% of new customers. At the end of the year, Quebecor’s share price dropped just 0.5% compared to January.

Cogeco Communications outperformed the rest of the S&P/TSX Capped Communication Services Index and posted positive growth, up about 10% from January. The telco plans to launch its mobile wireless services in the next few quarters.

Each of the Big Three started 2024 with plans to deleverage, but none of them were particularly able to. As of the end of the third quarter, Rogers and Bell each had over $40 billion in debt.

The financial health of Canada’s telecom sector, especially the Big Three, is shrouded in uncertainty going into 2025. Not only is the market maturing and exhibiting severe service saturation, but it is also facing regulatory challenges and wrenches thrown in by Ottawa — including the feds’ plans to cut back on immigration, stifling future telecom customer growth.

As such, Canada’s largest telcos are exploring new avenues to boost their bottom line moving into 2025. Bell appears to be pursuing a U.S. expansion, Rogers is committing more strongly to its sports and content aggregation endeavours, and Telus is grooming its business-to-consumer ventures, including Telus Health.