BCE Inc. Expands North American Footprint with $7 Billion Ziply Fiber Acquisition

Capital Markets Team

BCE Inc. recently announced that Bell Canada, its subsidiary, will acquire Ziply Fiber in a deal worth about CAD 5 billion, including the assumption of around CAD 2 billion in net debt, bringing the total to CAD 7 billion. This acquisition marks a major step in Bell’s push into the U.S. market, adding 1.3 million fiber connections across the Pacific Northwest with the goal of reaching over 3 million in the coming years.

This move will solidify Bell’s place as North America’s third-largest fiber internet provider, setting it up to reach 12 million connections by 2028. To fund the purchase, BCE will use proceeds from selling its stake in Maple Leaf Sports & Entertainment (MLSE), alongside a dividend reinvestment plan, with additional financing available if needed.

Bell views the acquisition as a prime opportunity to extend its high-speed internet services beyond Canada, bringing Ziply’s advanced network and strong local knowledge into its fold. Ziply Fiber, which has focused on expanding fiber connectivity in underserved areas, will continue to operate independently, keeping its headquarters in Kirkland, Washington. The transaction is expected to close in late 2025, pending regulatory approvals, and represents a major part of Bell’s strategy to grow its North American presence and deliver top-tier connectivity to millions more customers.

Bell Canada Enterprises (BCE): A Canadian Telecom Powerhouse

Bell Canada Enterprises (BCE Inc.), with over 45,000 employees, is a leading provider of broadband Internet, wireless, TV, and digital media services across Canada. The firm was founded in 1880 and is headquartered in Verdun, Canada. The company operates through two main segments: Bell Communication and Technology Services, and Bell Media. Through a vast network with over 8,000 distribution points, including Bell, Virgin Plus, Lucky Mobile, Best Buy Express, and Glentel locations, BCE has firmly positioned itself as a key retail and enterprise service provider nationwide.

Ziply Fiber: A High-Growth U.S. Fiber Internet Leader

Ziply Fiber is headquartered in Kirkland, Washington, and was founded in 2020. Ziply Fiber is backed by a strong group of investors, including WaveDivision Capital, LLC (WDC), Searchlight Capital Partners, L.P., Public Sector Pension Investment Board (PSP Investments), British Columbia Investment Management Corporation (BCI), and Canada Pension Plan Investment Board (CPP Investments), all of whom participated in its recent funding round. The company is a rapidly expanding fiber-optic internet provider in the Pacific Northwest, known for its high-speed, reliable fiber-optic services for residential, business, and enterprise customers. With over 1.3 million fiber locations and an ambitious goal to reach three million within four years, Ziply Fiber has earned a reputation as one of the fastest and most reliable internet service provider in the U.S. Northwest. The acquisition of Ziply Fiber will support BCE’s North American fiber expansion strategy, blending BCE's vast resources with Ziply’s strong regional presence and expertise in fiber-optic technology.

Transaction Details

BCE Inc., through its subsidiary Bell Canada, has agreed to acquire 100% of Ziply Fiber for a total transaction value of approximately CAD 7 billion. This includes CAD 5 billion in cash for the equity purchase and the assumption of CAD 2 billion in net debt, which will be rolled over upon the transaction's close. The acquisition is expected to close in the second half of 2025, pending customary regulatory approvals.

To fund the purchase, BCE will allocate CAD 4.2 billion from the net proceeds of its recent divestiture of a stake in Maple Leaf Sports & Entertainment (MLSE). The balance will be covered through BCE’s discounted treasury Dividend Reinvestment Plan (DRP), supplemented by a fully committed U.S. $3.7 billion delayed-draw term loan facility, ensuring flexibility in financing.

The valuation of Ziply Fiber places its enterprise value at approximately 14.3x its estimated 2025 adjusted EBITDA, including expected synergies from the transaction. This metric underscores BCE's confidence in the acquisition's ability to generate substantial future returns, given Ziply’s established operations and growth potential in the U.S. market.

Upon closing, Ziply Fiber will continue to operate as an independent business unit under the BCE umbrella, maintaining its headquarters in Kirkland, Washington, and leveraging its existing management expertise. The acquisition will add 1.3 million fiber locations to BCE's footprint, with Ziply's ongoing growth strategy targeting an expansion to 3 million fiber locations by 2028.

Strategic Synergy and Expansion into Underserved Markets

This deal aligns strategically with BCE’s focus on expanding its fiber footprint and diversifying geographically into the U.S. market, particularly in the Pacific Northwest, a region characterized by low fiber penetration. The acquisition enhances Bell’s position as North America’s third-largest fiber internet provider, growing its reach to over 9 million fiber-connected locations. By 2028, the company aims to achieve more than 12 million fiber locations, capitalizing on rising demand for high-speed internet services.

The transaction also offers strong synergy potential, combining Bell's financial resources and operational scale with Ziply’s advanced network infrastructure and regional expertise. The integration is expected to unlock significant growth opportunities, improving customer service and accelerating BCE’s trajectory as a leader in North American fiber technology.

With its financial structure safeguarded through proceeds from the MLSE divestiture and prudent leveraging strategies, BCE anticipates maintaining its investment-grade credit rating, further supporting its growth ambitions.

BCE Poised for Fiber Leadership in North America

BCE's acquisition of Ziply represents a major strategic milestone for Bell, significantly strengthening its position in the U.S. fiber market and enhancing its scale across North America. With this acquisition, BCE positions Bell as having a strong growth profile and a leading strategic position in the still-developing U.S. fiber market. It diversifies the company's operational footprint and opens up substantial growth opportunities. With Ziply, Bell is set to become the third-largest fiber internet provider in North America, following AT&T and Verizon, with approximately 9 million fiber-connected locations (7.7 million in Canada and 1.3 million in the U.S.). Bell Canada has already set an ambitious target to reach 12 million fiber-connected locations by 2028, a critical expansion to meet the growing demand for high-speed internet connections, which has been well received by its shareholders and the market.

Implications for the Future of BCE and Canadian Telecom

This acquisition raises significant implications for the Canadian telecommunications market, as it signals a shift in investment focus for Bell, alongside major competitors Rogers and Telus, toward international growth rather than domestic expansion. This reduced domestic involvement may raise concerns about the future of Canada’s telecom sector, including potential strategic and innovation challenges and the competitiveness of national infrastructure. In the long run, Bell may face the need to balance its international operations with domestic priorities, potentially shaping its investment decisions and strategic direction towards a renewed national focus in its development.