MONTRÉAL - BCE Inc . (TSX: NYSE:BCE) (NYSE: BCE), Canada's largest communications company, announced its subsidiary Bell Canada's agreement to acquire Ziply Fiber for C$7.0 billion, including debt. The deal, expected to close in the second half of 2025, will bolster Bell's position as North America's third-largest fiber internet provider.
This strategic move will extend Bell's fiber footprint into the United States, adding approximately 1.3 million fiber locations. With the acquisition, Bell aims to grow its fiber network to over 12 million locations by 2028.
Ziply Fiber, a leading fiber internet provider in the Pacific Northwest, has expanded its services since 2020, with plans to reach over three million locations in the next four years. The acquisition will see Ziply Fiber continue to operate from its Kirkland, Washington headquarters as a separate business unit.
Bell's acquisition values Ziply Fiber at approximately 14.3 times its estimated 2025 adjusted EBITDA, including synergies. The transaction is financed with C$4.2 billion from the sale of Bell's stake in Maple Leaf Sports & Entertainment and a discounted treasury dividend reinvestment program. A delayed-draw term loan facility will cover any timing gaps.
BCE has stated its intention to maintain its annual dividend at $3.99 per share through 2025, pausing dividend growth until financial metrics align with target ranges. The company's net debt leverage ratio is expected to remain stable post-acquisition.
The announcement of the dividend reinvestment plan amendment, pending Toronto Stock Exchange approval, will allow BCE to issue new common shares at a 2% discount, supporting strategic growth and balance sheet strength.
BCE and Bell Canada's president and CEO, Mirko Bibic, highlighted the acquisition as a milestone, leveraging their fiber expertise and enhancing growth. Ziply Fiber's CEO, Harold Zeitz, expressed alignment with Bell's vision and commitment to improving connected experiences.
This acquisition is based on a press release statement and is subject to customary closing conditions and regulatory approvals. The financial community can access a conference call discussing the announcement hosted by BCE.
In other recent news, BCE Inc. has been in the spotlight following BMO Capital Markets' decision to raise its stock target from C$48.00 to C$51.00, while maintaining its Market Perform rating. This revision was triggered by BCE's announcement of its intention to sell its 37.5% stake in Maple Leaf Sports & Entertainment to Rogers (NYSE:ROG) for C$4.7 billion, a deal set to close in mid-2025. The sale is projected to yield net proceeds of approximately C$4.1 billion, which BCE intends to use to reduce its debt.
BMO Capital Markets' financial analyst anticipates that this strategic move will result in annualized cash interest savings of around C$200 million for BCE. Furthermore, the company's projected pro forma debt to EBITDA ratio by the end of 2025 is expected to decrease from 3.7 times to 3.3 times due to the debt repayment. The transaction underscores BCE's commitment to enhancing its balance sheet and marks a significant milestone in its financial strategy. These are some of the recent developments that have shaped BCE's financial landscape.
InvestingPro Insights
As BCE Inc. (TSX: BCE) (NYSE: BCE) embarks on this significant acquisition of Ziply Fiber, investors may find additional context from InvestingPro's real-time data and tips particularly enlightening.
According to InvestingPro data, BCE has maintained dividend payments for an impressive 54 consecutive years, with 15 years of consecutive dividend increases. This track record aligns with the company's commitment to maintaining its annual dividend at $3.99 per share through 2025, as mentioned in the article.
An InvestingPro Tip notes that BCE pays a significant dividend to shareholders, which is consistent with the company's dividend strategy outlined in the acquisition announcement. This focus on shareholder returns may be particularly appealing to income-oriented investors.
Another relevant InvestingPro Tip indicates that BCE is a prominent player in the Diversified Telecommunication Services industry. This acquisition of Ziply Fiber further solidifies BCE's position, potentially enhancing its competitive edge in the North American market.
It's worth noting that InvestingPro offers 11 additional tips for BCE, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights could be valuable for those seeking to understand the full implications of this strategic move.
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