BCE Makes Billion-Dollar Bet on US Expansion: Acquires Ziply Fiber for $5 Billion

BCE has signed an agreement to acquire U.S. fiber-optic Internet provider Ziply Fiber for approximately $5 billion in cash. This follows a significant sale of the company’s stake in Maple Leaf Sports & Entertainment earlier this fall.

BCE said it would use about $4.2 billion of the net proceeds from the sale of its stake in MLSE, which owns the Toronto Maple Leafs and Toronto Raptors, to help pay for the costs of the transaction.

Last September, BCE announced it would sell a 37.5% stake in the sports giant to rival Rogers Communications for $4.7 billion. The transaction is expected to be completed in mid-2025.

BCE said Monday that the Ziply Fiber acquisition will expand Bell’s fiber footprint into the U.S., adding about 1.3 million fiber locations.

“We are trading interests in sports assets,” said BCE Chief Financial Officer Curtis Millen. And we are reallocating capital to fiber assets that have significant growth opportunities. “This is right in the middle of our wheelhouse.”

In addition to the purchase price, BCE will assume approximately $2 billion in net debt as part of the transaction. The acquisition is expected to close in the second half of 2025, subject to customary closing conditions and regulatory approvals.

BCE CEO Mirko Bibic called the U.S. a “natural expansion market” for the company and said the deal “firms Bell’s position as the third-largest fiber network and Internet service provider in North America.”

“This acquisition represents a very attractive entry point into the U.S. market for BCE, which aligns well with our fiber-first strategy and core competencies,” he said on a conference call with analysts.

Headquartered in Kirkland, Washington, Ziply Fiber provides fiber internet service in the Pacific Northwest region of the United States, including Washington, Oregon, Idaho, and Montana.

“This acquisition strengthens our growth strategy with the scale and experience of one of North America’s leading fiber operators,” Ziply Fiber CEO Harold Zeitz said in a press release.

Upon completion of the transaction, Ziply Fiber is expected to operate as a separate business unit and will remain headquartered in Kirkland.

Stock prices fall, analysts panic

BCE’s stock price fell on Monday after the company announced the deal, closing at $40.47, down $4.34, or about 9.7%.

Scotiabank analyst Maher Yaghi called the move “disturbing” for BCE, noting that the cost of loading customers, along with capital costs, is high for fiber operators in the country.

“Investors in Canadian Telecommunications are in this sector for dividends, not growth,” Yaghi said in a note. “They can get it somewhere else.”

He compared the deal to Verizon’s announcement in September that it would acquire fiber internet provider Frontier Communications in a $20 billion US deal.

Verizon said at the time that the deal would add 2.2 million fiber subscribers and expand network coverage to 25 million properties across 31 states and Washington, DC.

“We certainly understand Verizon’s drive to acquire Frontier given their geographic overlap in wireless, but we have a hard time seeing the same potential synergies with BCE’s current move,” Yaghi said.

Desjardins analyst Jerome Dubreuil said the deal included “what appears to be high-quality assets” and that BCE appeared to be motivated by the need to boost telecom growth over the long term. But he added that the move is likely to send a “negative signal” for Canada’s telecom outlook because BCE and its two biggest rivals, Rogers and Telus, have “directed a significant portion of their recent investments away from the sector.”

BCE has previously signaled its intention to cut spending on building Canada’s fiber network. The company said last year it would reduce network spending by $1.1 billion in 2024 and 2025. This was done in response to the CRTC’s order that large phone companies that own fiber Internet networks give competitors access to their networks for a fee.

Bell said this direction has reduced the business case for investing in domestic networks.