Canadian Telecom Titans: BCE vs. Telus – A Q2 2025 Deep Dive into Strategic Moves and Subscriber Trends

The Canadian telecom sector remains a cornerstone of the country's digital economy, with BCE Inc. (BCE) and Telus Corporation (T) dominating the landscape. Their Q2 2025 earnings reports reveal diverging strategies and subscriber dynamics, offering investors a critical lens to assess long-term value. This analysis dissects their financial performance, strategic asset moves, and subscriber trends to determine which stock holds stronger potential for sustained growth.

Financial Performance: BCE's Mixed Results vs. Telus's Stability

BCE's Q2 2025 results were a study in contrasts. Consolidated revenue rose 1.3% year-over-year, driven by product revenue growth, but adjusted EBITDA fell 0.9% due to higher operating costs. Net earnings increased by 6.6%, yet adjusted EPS dropped 19.2%, reflecting margin pressures. Free cash flow, however, grew 5.0% to $1.15 billion, bolstered by reduced capital expenditures.

Telus, by contrast, demonstrated more consistent performance. Its consolidated operating revenue and other income rose 2% to $5.1 billion, with adjusted EBITDA growth of 4% in its TTech and TELUS Health segments. Free cash flow surged 11% to $535 million, and the company reduced its leverage ratio to 3.7x, down 20 basis points from Q1 2025. Telus's disciplined debt management—$2.85 billion in hybrid debt raised in June and a $1.8 billion debt tender in July—underscores its financial resilience.

Subscriber Trends: BCE's Churn Reduction vs. Telus's Growth Momentum

BCE's wireless segment saw postpaid churn decline to 1.06%, the first year-over-year improvement since Q3 2022. However, postpaid activations fell 43.3% to 44,547, attributed to slower market activity and strategic focus on higher-value subscribers. Prepaid activations also dropped 3.7%. In broadband, BCE added 26,583 net fibre Internet subscribers—a 55.9% decline from Q2 2024—due to slower footprint expansion.

Telus, meanwhile, added 198,000 total telecom subscribers in Q2 2025, including 167,000 mobile and connected device additions. Its mobile churn rate held steady at 0.90%, the twelfth consecutive year below 1%. The company's connected devices segment grew 18% to 4.0 million, driven by IoT and smart home adoption. Telus's TELUS Health business also outperformed, with 16% revenue growth and 29% adjusted EBITDA growth, reflecting its global healthcare expansion.

Strategic Moves: BCE's AI Bet vs. Telus's Deleveraging Play

BCE's most transformative move was the $4.2 billion acquisition of Ziply Fiber, positioning it as the third-largest fiber provider in North America. This acquisition, funded by the sale of its 37.5% stake in Maple Leaf Sports and Entertainment (MLSE), accelerates BCE's North American fiber ambitions. The company also launched the Bell AI Fabric, a $500 MW hydro-powered AI compute cluster, in partnership with Cohere. These bets align with Canada's push for sovereign AI infrastructure but come with regulatory and execution risks.

Telus, meanwhile, focused on balance sheet optimization. Its $1.26 billion deal to acquire a 49.9% stake in Terrion, a wireless tower operator, monetizes its infrastructure while reducing leverage. The company also expanded its PureFibre network in Ontario and Quebec, targeting 1 million homes by 2026. Telus's strategic divestitures and debt management suggest a more conservative, cash-generative approach compared to BCE's aggressive AI and fiber bets.

Valuation and Risk Considerations

BCE's stock trades at a forward P/E of 12.5x, with a dividend yield of 4.2%, reflecting its maturity and stable cash flow. However, its adjusted EPS decline and regulatory headwinds in Canada's fiber market pose near-term risks. Telus, at a forward P/E of 13.8x and a 3.8% yield, appears slightly more expensive but offers stronger free cash flow growth and a healthier leverage profile.

For investors, the choice hinges on risk tolerance. BCE's AI and fiber investments could unlock long-term value but require patience and capital discipline. Telus's focus on subscriber growth, debt reduction, and healthcare expansion offers a more predictable, income-oriented path.

Investment Thesis

• BCE (BCE.TO): Best for investors seeking exposure to Canada's AI revolution and North American fiber growth. The Ziply Fiber acquisition and Bell AI Fabric position BCE as a key player in the global AI race, though regulatory and execution risks remain.
• Telus (T.TO): Ideal for investors prioritizing stable cash flow and disciplined capital allocation. Telus's subscriber growth, healthcare expansion, and deleveraging efforts make it a safer bet in a sector facing regulatory and competitive pressures.

Conclusion

Both BCE and Telus are well-positioned in the Canadian telecom sector, but their strategies diverge sharply. BCE's bold AI and fiber bets could redefine its long-term value, while Telus's balanced approach ensures steady growth and financial flexibility. For long-term investors, BCE's transformative potential may justify its risks, but Telus's consistency and resilience make it a compelling alternative. As the sector evolves, monitoring BCE's AI Fabric progress and Telus's PureFibre expansion will be critical to assessing their trajectories.