The Globe and Mail reports in its Friday edition that BCE's plan to slash its dividend by 56 per cent was unavoidable, but its convoluted growth plans risk adding to shareholders' chagrin. The Globe's Rita Trichur writes that the writing was on the wall long before last fall when the telco halted its annual dividend growth for the first time in 16 years. A dividend cut is always a bitter pill, but so is the company's more than $33.8-billion in long-term debt. BCE, which was to pay $5-billion to acquire U.S.-based Ziply Fiber, has struck a new strategic partnership with PSP Investments, called Network FiberCo. It seems BCE will wholly own Ziply's existing operations after the deal closes but will only own 49 per cent of Network FiberCo., which will function as a new wholesale network provider. Although Moody's said Thursday that BCE's dividend cut and new strategic partnership with PSP are "credit positive," it left the telco's credit rating unchanged. Network FiberCo. is being created to take on the debt needed to finance expansion and to keep it off BCE's balance sheet. The intention is to make BCE a growth company, but Ms. Trichur says shareholders would be better served if the telco became a utility instead.
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