BCE (BCE) Q3 2026 earnings review
BCE sells towers for cash, while AI spending cuts profit
Canada's largest telecom operator leaned on a one-time World Cup broadcast and an extra month from its US fibre acquisition while its core Canadian phone and internet business stood still. Total revenue rose 2% from a year ago, or about 1% by our math excluding the US unit, while profit per share excluding one-offs fell 6% because of higher interest and amortization costs. Free cash flow dropped 15% as capital spending jumped by nearly half to build AI data centres and US fibre.
| Revenue excluding US fibre (by our math) | +0.9% total revenue +2.2% to $6,182M |
|---|---|
| Profit per share, excluding one-offs | $0.74 -6.3% from a year ago |
| Free cash flow | $854M -14.9% on +49.3% capital spending |
| Saskatchewan AI data centre budget | Raised to exceed $1.7B on path to 1.2 GW |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because new deals to fund and expand BCE's growth projects were offset by stalled US fibre sales and rising capital bills. On the positive side, Bell agreed to sell almost half of its wireless towers to La Caisse for $2.45 billion, outlined a fourfold expansion of its Saskatchewan AI data centre, and doubled net new monthly mobile phone additions on calmer pricing. The bad news: monthly revenue at US unit Ziply Fiber barely moved, Canadian service revenue shrank 1%, and fourth-quarter AI construction bills will push full-year cash flow down toward the $2.2 billion middle of its prior plan.
The question now is whether heavy spending on AI data centres and US fibre will produce enough profit to pay for the capital and tower leases being used to build them. Either the new data halls and fibre passings lift revenue starting in 2027, or slow US subscriber additions and Canadian price discounts leave BCE with higher fixed obligations and tighter dividend coverage. Fourth-quarter US organic revenue and the first Saskatchewan data hall opening in the first half of 2027 will tell.
🐂 Bull Case
Tower Sale Brings $2.45 Billion to Cut Debt
BCE has been selling assets to pay down debt, and two smaller sales hit delays this quarter. The telecom group pushed the $675 million sale of its land mobile radio business into the first half of 2027, while a deal to sell northern operator Northwestel for up to $1 billion is being reworked. To keep debt reduction moving, Bell signed a much larger agreement with investment group La Caisse.
La Caisse will pay $2.45 billion for a 49.9% stake in TowerCo, a new business holding more than 5,000 Bell wireless tower sites across Canada. Bell keeps 50.1% control and will lease space on the towers under long-term contracts when the deal closes in the first quarter of 2027. Separately, Bell Media lifted third-quarter revenue 9.7% to $803 million and operating profit before depreciation 8.0% to $256 million after its FIFA World Cup broadcasts reached 30.5 million Canadians and drew more subscribers to its Crave streaming service.
What to watch: the closing of the TowerCo deal in the first quarter of 2027. The $2.45 billion cash inflow will show how quickly BCE can bring its debt down toward its 2027 target while its smaller asset sales wait for approvals.
Saskatchewan AI Data Centre Plan Quadruples
Bell AI Fabric is the company's business building data centres for artificial intelligence computing. In March, Bell partnered with the Government of Saskatchewan to build a 300-megawatt facility in Sherwood, relying on two anchor tenants. That concentration carries risk if construction slips or a tenant delays, because Bell pays for the buildings up front.
In September, Bell and the province signed a preliminary agreement for up to 900 megawatts of extra capacity at Sherwood, which would "create a path to 1.2 gigawatts (GW) of capacity in the province". All four buildings in the first phase were under construction by October 1, and Bell still expects the first hall to open in the first half of 2027. It also launched a cybersecurity AI model with partner Cohere on its Canadian infrastructure and signed a sovereign AI collaboration with Cisco. Total spending at Sherwood will now top the original $1.7 billion budget.
What to watch: binding customer contracts for the 900-megawatt expansion and the opening of the first Sherwood data hall in the first half of 2027. Signed leases will show whether new tenants are backing the larger build.
Calmer Mobile Pricing Lifts Subscriber Additions
Canadian mobile carriers spent the start of the year fighting for customers with heavy discounts. That price war has been a major risk to BCE's main wireless business. In the third quarter, the company said "pricing on base rate plans in the market was much more disciplined", which slowed the rate of customers switching carriers.
BCE added 24,110 net new postpaid mobile phone subscribers — customers on monthly billed plans — more than double the 11,511 it added a year ago. Monthly postpaid customer cancellations fell 0.07 percentage points from a year ago to 1.06%, and onboarding from a long-term government contract also helped. Still, average monthly revenue per mobile phone user fell 1.7% from a year ago to $57.07, so calmer pricing has not yet turned average bills positive.
What to watch: fourth-quarter wireless average revenue per user after the holiday shopping season. Holding the decline near 1.7% during Black Friday and Boxing Day promotions would show that rivals are keeping their price discipline.
🐻 Bear Case
AI Data Centre Bills Will Drain Fourth-Quarter Cash
Building AI data centres and US fibre networks is eating into BCE's cash generation, while its common dividend still costs $408 million a quarter. In September, credit rating agency S&P Global Ratings lowered Bell Canada's subordinated debt rating to BB+, which sits below investment grade, and kept a negative outlook on its senior debt.
- Third-quarter capital spending: $1,330 million, up 49.3% from a year ago, or 21.5% of revenue
- Third-quarter free cash flow: $854 million, down 14.9% from a year ago
- Saskatchewan AI data centre spending so far: about $475 million through September 30
- Nine-month free cash flow: $2,700 million, already above the $2.1 billion to $2.3 billion full-year outlook from prior quarters
The company said "Project spending is expected to increase in the fourth quarter of 2026 as construction continues and orders of long-lead-time components progress". If the prior $1.3 billion full-year budget for Saskatchewan holds, by our math about $825 million of spending will land in the fourth quarter and push fourth-quarter free cash flow negative.
What to watch: fourth-quarter capital expenditures and free cash flow. They will show whether full-year cash generation stays inside the $2.1 billion to $2.3 billion range and covers the $1.63 billion annual common dividend without adding debt.
US Fibre Revenue Stalls While Spending Grows
BCE bought US internet provider Ziply Fiber on August 1, 2025 to add a faster-growing business outside Canada. In the third quarter, the US unit reported $238 million of revenue against $160 million a year ago, when BCE owned it for only two months. On a monthly basis, by our math, US sales were about $79 million a month versus $80 million a year ago, and total revenue rose 1.7% from the second quarter's $234 million.
The company described US data sales as an "essentially stable year-over-year organic performance in the quarter", while US high-speed internet net additions fell 19.4% to 3,750 on "increased competitive intensity from cable competitors". Operating profit before depreciation fell to 39.9% of revenue, down 4.5 percentage points from a year ago, because of public-company transition costs and payments to its Network FiberCo build partner. Capital spending in the US unit reached $225 million, or 94.5% of its revenue, and Ziply agreed to spend another $200 million USD ($281 million CAD) buying two smaller US fibre businesses.
What to watch: fourth-quarter Bell CTS U.S. revenue, which will be the first full-quarter year-over-year comparison since the acquisition. A flat reading around $232 million would confirm that cable competition and wholesale disconnects are cancelling out the expensive fibre build.
Discounts and Rules Squeeze Canadian Telecom
Bell CTS Canada, the core Canadian telecom unit that brings in 85% of revenue, saw total revenue dip 0.2% from a year ago to $5,238 million. Only a 51.8% jump in low-margin wireline equipment sales to large businesses and public-sector clients kept the unit near even. High-margin service revenue fell 1.3% to $4,468 million, and operating profit before depreciation slipped 0.8% to $2,435 million, with its margin down 0.3 percentage points to 46.5% because operating costs rose 0.1 percentage points of revenue on equipment cost of goods sold and vendor commissions.
Home internet revenue declined on "greater residential acquisition, retention and bundle discounts", and Canadian residential fibre internet net additions fell 12.2% to 58,643 as Bell slowed its Canadian fibre build after regulators mandated wholesale access. In wireless, a regulatory ruling "prohibiting certain customer fees" cut connection revenue, lower-priced government lines diluted average bills, and traditional home phone lines shrank 9.8% to 1.52 million.
What to watch: Canadian service revenue growth and fibre net additions next quarter. Continued declines would show that enterprise IT services and the new Bell On-Demand Network platform are still too small to offset consumer discounting and regulatory pressure.
👓 Other Themes
Canada Economic Assumptions and Trade Risks
BCE updated its economic assumptions after the Bank of Canada raised its 2026 Canadian economic growth estimate to 1.0% from 0.7%. However, slow population growth and fewer international students continued to weigh on prepaid mobile and home internet sign-ups. The company also flagged ongoing uncertainty around US trade policy, elevated inflation from energy and imported goods, and soft labour markets.
💲 Other KPIs
Profit per share excluding one-offs fell 6.3% from $0.79 a year ago, and profit excluding one-offs dropped 5.2% to $695 million. Higher amortization of $385 million and interest expense of $465 million from the Ziply Fiber purchase drove the decline. Reported profit fell 86.0% to $630 million because last year included a $5.2 billion gain from selling Maple Leaf Sports & Entertainment.
Cash generated from operations rose 15.9% from $1,914 million a year ago, following an 11.0% rise in the second quarter and a 26.9% drop in the first quarter. Favourable working capital movements and lower cash payments for income taxes, interest, and staff severance lifted the quarter's cash inflow before capital spending.
Net debt — total debt and half of preferred shares, minus cash and half of junior subordinated notes — fell 1.7% from $40,234 million at the end of 2025. The reduction came largely from issuing $1.5 billion of junior subordinated notes, which count as half equity, and $290 million of gains from buying back bonds below face value.
🔮 Guidance
Raised. BCE now expects total capital spending at its Sherwood, Saskatchewan AI data centre to exceed $1.7 billion over time after signing a preliminary deal to expand capacity from 300 megawatts up to 1.2 gigawatts. The telecom group spent $475 million through September 30 and plans higher spending in the fourth quarter. By our math, its prior 2026 outlook implies about $825 million of fourth-quarter spending.
❓ Key Questions
Did BCE reaffirm its 2026 financial outlook targets?
The third-quarter report did not include the full-year outlook table for revenue, profit, or free cash flow. With nine-month free cash flow at $2,700 million against a prior $2.1 billion to $2.3 billion full-year target, investors need to know the fourth-quarter cash drain.
How fast did AI-powered solutions grow in Q3?
The company credited Ateko and Bell Cyber for helping Canadian data revenue, after reporting 29% combined growth for them in the second quarter. However, the third-quarter report gave no dollar figure or percentage growth rate to test its $1.5 billion 2028 target.
How much will the TowerCo lease cost Bell annually?
Selling 49.9% of TowerCo to La Caisse brings in $2.45 billion of cash, but Bell will lease capacity back on more than 5,000 towers and pay a minority partner share. Management has not disclosed the annual cash lease and dividend outflow.
How many US fibre locations has Ziply passed this year?
BCE spent $225 million on US capital expenditures in the third quarter and $544 million over nine months, plus $200 million USD on two bolt-on acquisitions, without disclosing how many homes Ziply Fiber now passes toward its 3 million 2028 target.