# BCE Inc. (BCE.TO) vs Bell Aliant Inc. (BA.TO)



## Toronto_Boy (Apr 9, 2013)

I would love to hear your thoughts on BCE vs BA (Bell Aliant). I don't own any telecom stocks at the moment ... so thinking of taking a small position in one of them for a medium term horizon. 

BA seems to have a better yield & price fluctuation is less. Thanks in advance.


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## AGHFX (Aug 31, 2012)

They are two different companies. BCE (Bell Canada Enterprises), commonly known as Bell, it a national company. It provides cellphone services, landline telephone, internet, cable, and media (it owns a variety of TV channels). Bell Aliant (BA) is a regional company, focused in Atlantic Canada. It provides landline telephone, internet (fibre-op), and cable. Though it does not have a national presence, it has been doing a good job expanding its fibre-op internet and cable services to rural parts of Atlantic Canada (as well as some of the more populated areas). BCE pays dividends to BA, which helps fund BA's high dividend payout.

I would consider BCE to be more of a stable stock, due to its size and diversification. BA is great to hold for its dividend, but it is more interest-rate sensitive and may be more susceptible to a decrease in share price if there's a large market sell-off. However, all things considered - if a "threatening" fourth player enters the Canadian telecom market, I could see BA as a great candidate for acquisition.

** Disclaimer - I hold both BCE and BA.


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## yyz (Aug 11, 2013)

Bell also owns about 44% of Bell Aliant.
BA has a nice dividend but it has gone from about $29 to $26 lately. 
I also own both


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## AGHFX (Aug 31, 2012)

yyz said:


> Bell also owns about 44% of Bell Aliant.
> BA has a nice dividend but it has gone from about $29 to $26 lately.
> I also own both


I knew there was a % of ownership but I didn't know how large off the top of my head .

I purchased BA at around $26 1 year ago. The price seems to have seasonal patterns. DRIPing has yielded me about 7.5% in the past year so I'm not complaining about the lack of capital appreciation. Maybe this year I'll work on adding to / selling this position to lower my ACB and lock in some profits. Either way, this stock (and BCE as well) are hold forever stocks for me - unless significant fundamental changes occur.


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## Mall Guy (Sep 14, 2011)

BA is currently rolling through a capital intensive period as they roll out a fiber-optic network to complete with the cable companies. The local cable operator (Eastlink) recently entered the cellphone market (they we're already offering home phone service), and then there's Rogers. Problem is Atlantic Canada just doesn't have that many people! And cable is often pre-wired into new construction, and BA's solution is to wire around the outside and drill into the house . . . not for me, and I own BA !


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## yyz (Aug 11, 2013)

Don't forget that Bell Aliant also operates in some parts of Ontario as well.
The Fibre Op they are installing may be an expensive infrastructure but it could pay off for them if they can get the users.Then there are also the rumours that have been floating around for years that BCE may buy the rest of BA out.


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## Canadian (Sep 19, 2013)

Mall Guy said:


> Problem is Atlantic Canada just doesn't have that many people!


You're right - population density is quite low. BA is doing a good job expanding their network to the more rural areas that larger companies overlook. It's good for their subscriptions but we'll see in coming years if it's profitable or if it's too costly to service.

BA's fibre op subscriptions have been up every quarter for the past year, which is good news. I live in Atlantic Canada and I know _many_ people who are switching from Eastlink to BA for various reasons. The company is managing their costs as well - previous quarter took a hit because of an early debt retirement penalty. It will benefit them in the long run, though.



Mall Guy said:


> (Eastlink) recently entered the cellphone market


I've looked into their prices and they're nothing great. Basic calling and texting is reasonable, but their data rates are kind of expensive - nothing worth switching to. Your total bill, including voice, texting, data, would be priced comparable to other wireless carriers.


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## Canadian (Sep 19, 2013)

yyz said:


> there are also the rumours that have been floating around for years that BCE may buy the rest of BA out.


Wouldn't that be nice - I currently hold both companies!

Given BCE's current 44% ownership in BA, it wouldn't be too far of a stretch to imagine a buyout. They pay a significant dividend to BA, so it would save them over the long run. I don't know if this is on the horizon though, considering no real foreign threats put their names in for January's auction.


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## yyz (Aug 11, 2013)

Actually BA pays BCE the dividends.
The buyout rumour also was stating that BCE is running out of options for mergers ie media as they already own so much after the Astral buyout that they probably would be very limited in that regard.
I own both as well and would love to see it happen.


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## Canadian (Sep 19, 2013)

yyz said:


> Actually BA pays BCE the dividends.


Hehe you're right - my mistake each:


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## nortel'd (Mar 20, 2012)

http://www.theglobeandmail.com/repo...lion-deal/article19720250/#dashboard/follows/

Canada's BCE to take unit Bell Aliant private

_“July 23 (Reuters) - BCE Inc , Canada's largest telecommunications company, said it would take Bell Aliant Inc private by buying the stake it does not already own in the company for about C$3.95 billion ($3.68 billion).
BCE controls 44 percent of Bell Aliant, which offers telecom services in eastern Canada, and values the remaining stake at C$31 per share - a premium of about 10 percent to the stock's close on Tuesday.
"Privatizing Bell Aliant enhances our broadband investment strategy and capital markets objectives," said BCE Chief Executive George Cope.
Bell Aliant shareholders can elect to receive either C$31 in cash, or 0.6371 of one BCE share, or C$7.75 in cash and 0.4778 of one BCE share for every share they own, the companies said.”
_

I hold shares of both BA and BELL ALIANT 6.17% 26FB37 in my non-RRSP trading account. The BELL ALIANT 6.17% 26FB37 bond is trading at $117.76.

With the Bell Aliant shares being privatized, what will happen to any Bell Aliant Bonds?


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## RBull (Jan 20, 2013)

^ Have you contacted BCE investor relations to ask the question?


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## nortel'd (Mar 20, 2012)

RBull said:


> ^ Have you contacted BCE investor relations to ask the question?


Did as you suggested RBull and received the following email …. 
_Good afternoon! Thank you for your email. Please note that all the Bell Aliant bonds will remain outstanding bearing the same characteristics. Regards, Lyne Roy, Manager, Investor Relations, BCE Inc.
_
With that settled, here is my concern…

With the privatization of Bell Aliant by BCE, Bell Aliant has just experienced an extraordinary leap in credit-worthiness. As a corporate issuer's outlook brightens, the credit spread (versus Government of Canada bonds) for the issuer will decrease. Companies whose credit-worthiness substantially increases may want to pay off existing expensive debt in order to take advantage of what could be much lower borrowing costs. The callable optional redemption feature allows for this opportunity.

The BELL ALIANT 6.17% 26FB37 bond is callable and as stated in its prospectus, _“redeemable at the option of the Partnership at any time and from time to time, in whole or in part upon not more than 30 days’ and not less than 10 days’ prior notice at the greater of the Canada Yield Price and their principal amount, together in each case with accrued and unpaid interest to the date fixed for redemption.” _

I have held other callable bonds and they were called. I recall owning a callable RBC bond I bought in 2004 that was to expire in 2014. To my disappointment, it was called in 2009. 

I am now faced with sell and run with $4000 in capital gains or sit and wait for $863 per year in interest payments. If the bond is never called and matures in 2037, I have a chance of making approximately $19,000 in interest and $1250 in capital gains. 

I am leaning towards selling … but … maybe I am missing something. I have read the prospectus over and over and went online for an explanation of what it means. I have to admit, I don’t fully understand what I am reading. :frown:

Comments from anyone out there with the same opinion or a different opinion and why would be appreciated.


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## Nemo2 (Mar 1, 2012)

nortel'd said:


> I have read the prospectus over and over and went online for an explanation of what it means. I have to admit, I don’t fully understand what I am reading.


Well, that's two of us........figure that one thing's a given though......if rates go lower and they can sell bonds with less of a return to the buyer, they'll call them.....and if rates rise substantially they'll 'never' be called.


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## RBull (Jan 20, 2013)

nortel'd said:


> Did as you suggested RBull and received the following email ….
> _Good afternoon! Thank you for your email. Please note that all the Bell Aliant bonds will remain outstanding bearing the same characteristics. Regards, Lyne Roy, Manager, Investor Relations, BCE Inc.
> _
> With that settled, here is my concern…
> ...


Good job on the contact with BCE. I can understand your dilemma and currently have one callable bond myself. However I keep bonds in registered accounts and capital gains is not a factor. 

Have you compared BCE bond offerings to see the rating difference and rates? Have you considered rates may well be headed up, which would also influence the reason to call or likely NOT, just as nemo2 said. I'm the same on the prospectus thing.....


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