BCE signs deal to buy U.S. fibre internet provider Ziply Fiber for $5 billion

BCE Inc.'s shares dropped nearly 10% on Monday following the announcement of its $5 billion acquisition of U.S. fibre internet provider Ziply Fiber, which includes assuming approximately $2 billion in net debt.

The company's stock closed at $40.47, down $4.34.

The deal, aimed at expanding Bell’s fibre presence into the U.S. by adding about 1.3 million fibre locations, is viewed as a strategic move by BCE to solidify its position as the third-largest fibre network provider in North America.

BCE CEO Mirko Bibic highlighted the U.S. as a "natural expansion market" and expressed optimism about investing in innovation across a larger customer base.

Based in Kirkland, Washington, Ziply Fiber serves the Pacific Northwest, including Washington, Oregon, Idaho, and Montana.

The acquisition is expected to close in the latter half of 2025, pending regulatory approvals, and Ziply Fiber will operate as a separate unit post-acquisition.

Analysts have expressed mixed feelings about the deal. Scotiabank analyst Maher Yaghi questioned the logic behind the acquisition, citing high customer acquisition costs in the U.S. fibre market and noting that Canadian telecom investors typically prioritize dividends over growth opportunities.

He compared BCE's move to Verizon's recent $20 billion acquisition of Frontier Communications, which added 2.2 million fibre subscribers.

Despite concerns, BCE officials maintained that the acquisition aligns with their core business strategy focused on fibre growth. BCE plans to use about $4.2 billion from the sale of its stake in Maple Leaf Sports & Entertainment to fund the Ziply deal.

This sale to Rogers Communications Inc., valued at $4.7 billion, is set to close in mid-2025.

Desjardins analyst Jerome Dubreuil recognized the potential of the Ziply asset but noted the acquisition could signal negative trends for Canadian telecom investments, as major players like BCE, Rogers, and Telus shift their focus away from domestic fibre expansion due to regulatory challenges.

BCE has previously indicated plans to reduce its domestic fibre network spending in light of new CRTC mandates requiring access to their networks by competitors, affecting the business case for further investment.