Bell Canada announced its acquisition of Kirkland-based fiber internet service provider Ziply Fiber in a deal valued at around $3.6 billion. This move will help Bell expand its reach into the Pacific Northwest, where Ziply currently serves more than 1.3 million business and residential locations across Washington, Oregon, Idaho, and Montana. Despite a decline of over 10% in BCE stock following the announcement, the company has ambitious plans to expand Ziply’s service area to over three million locations within the next four years.
This acquisition comes after Ziply’s $1.35 billion deal to acquire the Northwest operations of internet and TV provider Frontier Communications. Ziply has built out around 2,000 new fiber miles, positioning itself as the fastest residential internet service provider in the U.S. The company is led by executives with deep roots in the telecommunications industry, including the former president of Wave Broadband and managing director at WaveDivision Capital, as well as the former CEO of Wave Broadband who serves as the chairman of Ziply. According to a spokesperson, Ziply does not expect any changes to its Seattle-area workforce or operations as a result of the acquisition.
This move marks a significant expansion of Bell Canada’s operations into the United States, as Ziply Fiber serves homes and businesses in Oregon, Washington, Idaho, and Montana. Mirko Bibic, CEO of Bell Canada’s parent company BCE, highlighted the strategic importance of the acquisition, stating that it marks a bold milestone in Bell’s history as they lean into their fiber expertise and expand their reach beyond Canadian borders. Bell Canada plans to retain Ziply’s current management to ensure continuity and stability for its customers.
Bell’s expansion into American market
BCE is partly funding the acquisition with proceeds from the sale of its stake in the Toronto Maple Leafs and Toronto Raptors teams. While details on how the acquisition will directly benefit Ziply Fiber’s customers were not specified, Bell Canada noted that it aims to introduce new products and technological capabilities in the future.
This acquisition positions Bell Canada to leverage its fiber expertise and further its market presence in the U.S. telecommunications sector. However, the decision has not been well-received by income-seeking investors, as Bell announced it would pause common-share dividend increases after consistently raising payouts for 16 consecutive years. Despite investor skepticism, Bell CEO Mirko Bibic is optimistic and believes the U.S. expansion will significantly boost Bell’s cash flow, making the decision a career-defining acquisition.
Bibic and his team have spent nearly two years developing this U.S. fiber growth strategy, identifying a key statistic that only 51 percent of U.S. homes have high-speed fiber internet access compared to 75 percent of Canadian households. Part of Bibic’s expansion plan includes selling Bell’s minority stake in Maple Leaf Sports & Entertainment and reinvesting $4.2 billion from the sale into Ziply. Bell projects that the U.S. business’s EBITDA will grow at an 11-percent annual rate, a figure challenging to match in the domestic telecom industry.
Rating agency Moody’s views the Ziply acquisition as “credit positive” for Bell, suggesting the deal will expand Bell’s geographic footprint and position it as the third-largest fiber provider in North America. If successful, Bell will establish a dominant U.S. fiber network, potentially leveling the playing field in high-speed internet service between the two countries.
