BCE Expands Into the U.S. Fiber Market With Ziply Fiber Acquisition

Core Viewpoint - BCE Inc.'s subsidiary Bell Canada has agreed to acquire Ziply Fiber for nearly C$7 billion to enhance its fiber footprint in North America and tap into the U.S. broadband market [1][2][3] Acquisition Details - The acquisition is valued at nearly C$7 billion, comprising C$5 billion in cash and approximately C$2 billion in net debt, expected to close in the second half of 2025, pending regulatory approvals [2] - Ziply Fiber will operate as a separate business unit under Bell, headquartered in Kirkland, WA, after the acquisition [2] Market Positioning - This acquisition positions BCE for higher growth and diversification by strengthening its presence in the underserved U.S. fiber market, providing access to a significant customer base [3] - Ziply Fiber has connected over 1.3 million locations and aims to reach more than 3 million within four years, contributing to BCE's goal of over 12 million fiber locations by 2028 [4] Synergies and Financial Metrics - The acquisition is expected to generate substantial synergies, enhancing customer service in both Canada and the U.S. by leveraging technological expertise [5] - Ziply Fiber's enterprise value is based on a metric of 14.3 times its estimated adjusted EBITDA for 2025, including run-rate synergies [5] Funding Strategy - The C$5 billion cash component will primarily be funded through BCE's sale of its stake in Maple Leaf Sports & Entertainment for C$4.7 billion, expected to close in mid-2025 [6][7] - BCE has secured a $3.7 billion delayed-draw term loan facility as backup financing to ensure the acquisition proceeds smoothly [7] Dividend and Shareholder Value - BCE plans to maintain its annual common share dividend at C$3.99 per share through 2025 but will pause any dividend growth until financial metrics align with target ranges [8] - An amendment to BCE's Dividend Reinvestment and Stock Purchase Plan will allow new shares to be issued at a 2% discount to the average market price, aimed at retaining cash for strategic initiatives [9]