BCE has room to grow its wireless business, says Byron Capital

Yesterday, BCE (TSX:BCE) reported its fourth quarter and full-year results for 2012. The company earned $1.9-billion on revenue of $5.16-billion, which was in line with the street’s expectations.

CEO George Cope said the company’s mix of businesses is changing.

“Bell’s investment in Canada’s best broadband networks, products and content is delivering new choices for consumers and enhanced competition in TV, wireless and media. Bell has tremendous momentum in the marketplace, propelled by the fast expansion of Fibe TV, strong smart phone growth, and the unmatched innovation and investment in Canadian news, sports and entertainment content by Bell Media.” he said.

“Growth services such as Fibe, 4G LTE and next-generation business services like cloud computing increasingly dominate our operating mix. At the same time, the Bell team is delivering significant improvements in customer service while reducing our operating costs. The strong EBITDA, cash flow and net earnings that result from the focused execution of our strategy enable us to continue to deliver on our commitment to return value to our shareholders,” Cope added.

Byron Capital analyst Rob Goff says BCE he is bullish on BCE’s wireless business, but says the company is underexposed to the space when compared to peers such as Rogers and Telus. For this reason, Goff, in a research update to clients this morning, raised his price target on BCE, but only by $1, to $46, while maintaining a HOLD rating on the stock.

Goff believes BCE will turn to wireless as a key growth driver and look to tighten the gap in its asset mix. The company currently has only 25% exposure to wireless, as opposed to 64% and 62% for Rogers and Telus, respectively.

Shares of BCE on the TSX closed today down .2% to $44.23.

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