Q: Given the announcement today of BCE selling its interest in MLSE, the market seems to be reacting somewhat positively to the news - I’m curious as what do you think is a comfortable level of debt that the market is looking for? How much more assets do you think the market would like BCE to shed and apply to debt reduction??
5i Research Answer:
BCE has total net obligations of about $37B, minus its after-tax proceeds of the recent asset sale. With annual cash flow of $7.6B, we think investors will become more comfortable with debt in the $28B range, which would require more sales or other capital coming in. If we assume ~$3B on the recent sale, this would imply about $6B more. But of course sentiment can be fickle. If BCE can improve its earnings growth rate we think debt concern would dissapate.