BCE to buy U.S. internet provider Ziply for $5B, in part with funds from

BCE has signed a deal to buy U.S. fibre internet provider Ziply Fiber for about $5 billion in cash, a move that comes after the high-profile sale of the company’s stake in Maple Leaf Sports & Entertainment earlier this fall. 

BCE said it will help pay for the deal by using about $4.2 billion in net proceeds from selling its stake in MLSE, which owns the Toronto Maple Leafs and the Toronto Raptors.

In September, BCE announced it would sell its 37.5 per cent stake in the sports conglomerate to rival Rogers Communications for $4.7 billion. That transaction is expected to close in mid-2025.

Acquiring Ziply Fiber will extend Bell’s fibre footprint to the United States, BCE said Monday, adding approximately 1.3 million fibre locations.   

“We’re trading our stake in a sports asset … and we’re reallocating capital into a fibre asset with significant growth opportunity, which is straight down the middle of our wheelhouse,” said BCE chief financial officer Curtis Millen.   

In addition to the purchase price, BCE will assume about $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 chief executive Mirko Bibic called the U.S. a “natural expansion market” for the company, and said the transaction “cements Bell’s position as the third-largest fibre network and internet service provider in North America.”

“The acquisition represents a highly attractive U.S. market entry point for BCE, and it’s one that’s well aligned with our fibre-first strategy and core competencies,” he said on a conference call with analysts.

Based in Kirkland, Wash., Ziply Fiber offers fibre internet service in the U.S. Pacific Northwest, including Washington, Oregon, Idaho and Montana.

“This acquisition enhances our growth strategy with the scale and experience of one of North America’s leading fibre operators,” Ziply Fiber chief executive Harold Zeitz said in a news release.  

Once the deal has closed, Ziply Fiber is expected to operate as a separate business unit and will continue to be headquartered in Kirkland.

Shares drop, analysts puzzled

BCE’s share price took a hit on Monday after the company announced the deal, closing at $40.47, down $4.34 or around 9.7 per cent.

Scotiabank analyst Maher Yaghi called the move “perplexing” for BCE, noting the costs to load customers — along with capital expenses — are high for fibre operators in the U.S.

“Investors in Canadian telecom are in the sector for dividends and not in it to get growth; they can get it elsewhere,” Yaghi said in a note.

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

Verizon…