Bell (BCE) Q1 2026 earnings review
U.S. Expansion Masks Core Canadian Softness
BCE delivered 4.0% consolidated revenue growth in Q1, but the headline masks a stalling domestic engine. The core Bell CTS Canada segment saw service revenues contract 1.2% as mobile ARPU declined and legacy wireline products faded. Growth is now entirely dependent on the recently acquired U.S. Ziply Fiber business ($234M revenue) and a surging AI-powered enterprise portfolio (+113% AI revenue). Profitability remains heavily pressured: Adjusted EPS fell 8.7%, and FY26 guidance confirms earnings will continue decelerating as the company absorbs heavy D&A and interest costs from its strategic pivot to the U.S.
🐂 Bull Case
Bell Business Markets revenue grew 9.7%, propelled by an explosive 113% growth in AI-powered solutions (Ateko, Bell Cyber, Bell AI Fabric). This validates management's strategy to capture the enterprise 'Sovereign AI' market.
Bell Media's digital transformation is succeeding. Crave subscriptions surged 25% to 4.74 million, and overall digital revenues grew 8%, providing a critical buffer against traditional TV declines.
🐻 Bear Case
The core domestic wireless business is struggling. Blended ARPU fell 0.8% to $56.61 amid fierce competition, and postpaid churn spiked, undermining the premium-brand strategy.
Guidance for FY26 Free Cash Flow was slashed to $2.1-$2.3B (a ~31% drop) due to a $1.3B incremental CapEx injection required for the new Saskatchewan AI data centre.
⚖️ Verdict: ⚪
Neutral. Management is executing well on its U.S. fiber and AI enterprise diversification strategies, but the deterioration in the core Canadian wireless and wireline operations makes this a transition story with heavy near-term capital burdens.
Key Themes
Wireless Churn Reversing Progress
A clear contradiction emerged this quarter. In Q2 and Q3 of 2025, management aggressively touted historic, multi-year improvements in postpaid churn, citing superior customer service. However, in 26Q1, postpaid mobile phone churn jumped significantly to 1.34% (up from 1.21% a year ago). Management blamed a 'more competitive market environment and elevated promotional activity,' suggesting that earlier improvements were fragile and highly sensitive to peer pricing.
Enterprise AI Growth Accelerating
Bell Business Markets (BBM) proved to be the standout organic growth driver. Revenue accelerated 9.7% YoY, directly fueled by a 113% explosion in AI-powered solutions. The combined force of Ateko, Bell Cyber, and Bell AI Fabric is successfully shifting BBM from legacy connectivity to high-margin tech services.
U.S. Fiber (Ziply) Anchoring Growth
The Bell CTS U.S. segment is stable and delivering exactly what was promised. Ziply contributed $234M in revenue and $102M in adjusted EBITDA (43.6% margin). With 6,775 FTTH net activations in the quarter, this unregulated asset is effectively masking the 1.2% service revenue decline in the Canadian CTS segment.
Crave Powers Digital Media Pivot
Bell Media's subscriber revenue grew 11.8%, driven by a massive 25% YoY increase in Crave subscriptions (reaching 4.74 million). This strong direct-to-consumer digital performance (+8% total digital revenue) managed to keep total Media revenue slightly positive (+0.4%) despite severe traditional advertising headwinds.
Macro Pressures Crushing Traditional Advertising
Management explicitly cited macroeconomic headwinds—specifically 'economic uncertainty'—as a primary culprit for continued softness in non-sports traditional advertising. Total advertising revenue decelerated sharply, down 12.8% YoY, exacerbated by a shift in ad spending toward the principal broadcaster of the 2026 Olympic Winter Games.
Canadian FTTH Growth Decelerating
Despite Bell's massive historical investments in Canadian fiber, domestic FTTH net activations decelerated to 42,750 (down from 47,992 in Q1'25). Management pointed to slower population growth and heavy competitor promotions. With capital now shifting heavily to the U.S. and AI, Canadian fiber growth appears to be permanently cooling.
Other KPIs
Decelerating. Margins compressed by 40 basis points from 43.1% in Q1'25. Operating costs grew 4.9%, outpacing revenue growth. This was driven by the integration of Ziply Fiber's cost structure, higher premium content costs at Bell Media, and increased commissioning expenses for wireless activations.
Accelerating. Up from 12.3% a year ago, reflecting the start of $156 million in U.S. investments for Ziply's footprint expansion and early capital outlays for Bell AI Fabric facilities. This metric will surge significantly higher by year-end based on new guidance.
Guidance
Accelerating vs FY25's sluggish 0.2% growth. The midpoint (3.0%) relies heavily on a full year of Ziply Fiber operations and continued aggressive scaling of the AI enterprise solutions portfolio.
Decelerating. A painful continuation of the 7.9% drop seen in FY25. The D&A step-up from the Ziply acquisition and increased interest expenses are completely wiping out operational EBITDA gains.
Reversing sharply downward. Down roughly 31% from FY25's $3.18B. This dramatic drop is entirely due to ~$1.3B in incremental capital expenditures directed toward the new Saskatchewan AI data centre.
Accelerating significantly from 15.1% in FY25. Management had previously guided for <15% in February, but the massive 300 MW Saskatchewan AI infrastructure partnership has fundamentally altered the near-term capital expenditure profile.
Key Questions
Wireless Churn Reversal
You spent the back half of 2025 highlighting historic improvements in wireless churn, yet Q1 saw a spike to 1.34%. Has the market's promotional intensity fundamentally broken your premium-tier retention strategy?
Saskatchewan AI Monetization
You are injecting $1.3B of incremental CapEx for the Saskatchewan 300 MW AI data centre, slashing near-term FCF. What is the specific timeline and expected ROI profile for monetizing this massive sovereign AI capacity?
Canadian Fiber Slowdown
Canadian FTTH net adds fell YoY, citing slower population growth and competition. With capital reallocation pivoting heavily to the U.S. and AI Fabric, have we seen the peak of domestic broadband growth?