Bell Canada parent company BCE Inc. BCE-T is planning to spend $1.7-billion to build a 300-megawatt artificial-intelligence data centre outside Regina, the latest addition to the telecom’s AI ambitions as it aims to diversify its revenue streams.
BCE said the facility, which will be located in the Saskatchewan rural municipality of Sherwood, will be the largest in Canada once completed. Demand for data centres is booming around the world as governments and companies race to invest in the growth and adoption of AI.
The data centre will be rented by two main U.S. tenants and will get its power from energy Crown corporation Saskatchewan Power Corp.
While the data-centre campus will come with substantial upfront costs, which will require the company to take on more debt, BCE estimates that the project will not increase its debt leverage, and expects revenue, earnings and free cash flow to catch up within three years.
“At run rate, this is a leverage-neutral investment and viewed by the rating agencies as credit positive, given how it amplifies our growth profile,” BCE chief executive officer Mirko Bibic told The Globe and Mail.
BCE said it will spend $1.7-billion to build the facilities, $1.3-billion of which it will spend this year. The company plans to raise this through a mix of debt and cash. At the end of 2025, the company had $320-million of cash and equivalents on hand. The tenants will make some prepayments for equipment, which will help to offset costs in the first year, Mr. Bibic said.
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Construction is scheduled to begin this spring, with the first capacity coming online in the first half of next year. Bell said it expects the data centre will support at least 80 full-time jobs, with facility construction creating at least 800 trades roles.
Once the facility is fully constructed and operational, BCE expects it will generate annual revenue of $500-million, and $400-million EBITDA, or earnings before interest, taxes, depreciation and amortization. It will also generate $250-million in annual free cash flow.
Overall, the company is still targeting a net-debt-to-EBITDA ratio of 3.5 times by the end of 2027, and aiming to hit approximately three times leverage by 2030.
Annual EBITDA of about $400-million will support about $1.4-billion in borrowing without altering the leverage ratio, Mr. Bibic said.
Saskatchewan is an untraditional choice for a data centre, but illustrates the challenges developers now face securing land and electricity. Data centres have grown larger and more power hungry because AI models and applications are more energy intensive than traditional digital services such as cloud computing and data storage.
When Bell announced plans for six data centres in B.C. last year, Mr. Bibic emphasized the province’s clean-energy supplies as a draw. But Saskatchewan’s power mix is heavily skewed toward fossil fuels.
Natural gas generated 41 per cent of the province’s electricity as of mid-last year, according to SaskPower, while coal provided another 21 per cent. Hydro, wind and solar made up the bulk of the remainder. Saskatchewan is looking to nuclear energy to provide electricity, but these projects are many years away.
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Mr. Bibic directed questions about electricity and emissions to SaskPower, but said the company is looking to limit environmental impact. That includes using a closed-loop cooling system that does not draw on municipal water supplies. It’s also discussing providing waste heat from the facility to nearby university campuses.
Bell said space in its Saskatchewan facility has been leased to U.S. companies Cerebras Systems and CoreWeave Inc., which will install their own computing infrastructure and secure customers. However, a significant portion of the available capacity will be allotted by Bell to Canadian companies, governments and researchers.
CoreWeave, which typically purchases chips from Nvidia Corp., has emerged as a big player in providing access to AI computing infrastructure. While investors have raised concerns about its heavy debt load, Mr. Bibic said that CoreWeave is well capitalized and that Bell has secured a long-term commitment with flexibility in its contract to protect against risks.
BCE’s strategy to invest in the land, power, cooling and fibreoptic connectivity for data centres – and not the computer chips inside of them – also limits risk to the company, he continued. Chips need to be replaced every few years at great cost.
“We’re not investing in the compute hardware,” Mr. Bibic said. “We don’t want to take the technology obsolescence risk.”
BCE expects revenue growth for the company to remain unchanged in 2026. But it now projects a free cash flow decline by between 28 and 34 per cent compared with the previous year.
However, the company increased its three-year outlook for its compound annual revenue growth rate by half a per cent, and bumped estimates for the compound annual free-cash-flow growth by 1.5 per cent.
The company reiterated that it does not expect to change its dividend payout in 2026.
