By: Maximilien Kender, Jules Bedrossian, Amin Ouamar and Malo Inizan (HEC Paris); Amya Hillis, Janira Martinez, Zin Nas, Irene Souny Bihr, Christian Lippmann, Leo Fridjhon, and Abraham Vongkhamdy (Columbia University)
Photo: Denny Müller (Unsplash)
Overview of the deal
Acquirer: BCE Inc.
Target:Â Ziply Fiber
Total Transaction Size:Â $3.65 billion
Closed date:Â H2 2025
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On November 4, 2024, Canada’s telecom giant BCE Inc. signed an agreement to acquire 100% equity in Ziply Fiber for approximately C$5.0 billion (U.S. $3.65 billion). This strategic move aims to strengthen BCE’s position as a leading fiber provider across the North American continent, expanding its network by 1.3 million locations through Ziply Fiber’s U.S.-based infrastructure. This acquisition will help both companies address the growing need for high-speed internet and advanced data solutions.Â
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This deal aligns with BCE's broader strategy to transition from a traditional telecommunications company to a technology-focused organization, as demonstrated by its recent initiatives, restructuring efforts, and acquisitions (including the purchase of Manitoba Telecom Services in 2017 and, more recently, the acquisition of tech services companies Stratejm and CloudKettle Inc. in July 2024). Ziply Fiber’s expertise in innovation and technology will support BCE in diversifying its service offerings and unlocking significant growth opportunities. The deal is expected to close in the second half of 2025, subject to regulatory approval.
“This acquisition marks a bold milestone in Bell's history as we lean into our fibre expertise and expand our reach beyond our Canadian borders. Fibre is at the heart of what we do, and we're proud to connect people and businesses and enable them to do more through our fibre networks. By bringing together Bell and Ziply Fiber's exceptional talent, we'll accelerate our growth while continuing to deliver significant value for our customers and shareholders." - Mirko Bibic, CEO (BCE)
Company Details (Acquirer - BCE)
BCE is a publicly traded Canadian company that provides a wide range of telecommunication services, from fixed line to mobile telephony, Internet services, and television.Â
Founded in 1983, headquartered in Verdun (Montréal), Canada
CEO: Mirko Bibic
Number of employees: 45,132
Market Cap:Â $34.48 bn
EV: $75.51 bn
LTM Revenue:Â $24.46 bn
LTM EBITDA:Â $8.81 bn
LTM EV/Revenue:Â 3.1xÂ
LTM EV/EBITDA:Â 8.6x
Company Details (Target - Ziply Fiber)
Ziply Fiber is an American telecommunications firm that provides 1.3 million residential and commercial clients in Washington, Oregon, Idaho, and Montana with fiber-optic internet services.
Founded in 1964, headquartered in Kirkland, Washington, USA
CEO: Harold Zeitz
Number of employees: 1,400
Market Cap:Â C$5.0 bn (USD 3.65 bn)Â As of 11/04/2024
EV: C$7.0 bn
LTM Revenue:Â C$1.4 bn
LTM EBITDA:Â C$405 m
LTM EV/Revenue:Â 5.0x
LTM EV/EBITDA:Â 14.3x
Projections and Assumptions
Short-Term Consequences
With this acquisition, BCE is entering the U.S. market, particularly in rural areas of the Northwest, where demand for high-speed Internet is increasing. This acquisition provides strategic access to underserved markets. The Biden administration has prioritized expanding broadband access, targeting full connectivity for U.S. households by 2030. In rural areas, fixed broadband coverage reached approximately 91% in 2020, but this network coverage is poor. The U.S. has historically relied on technologies like coaxial cable and DSL. Though less efficient, these infrastructures have been sufficient to meet the needs of many consumers for a long time. Â
Additionally, BCE has taken over one of the fastest internet suppliers in the Northwest and can now leverage Ziply’s Fiber optic infrastructure to optimize its operations and accelerate the deployment of its technologies in the rural areas of the Northwest and, shortly, in other rural areas of the US.Â
BCE announced that this acquisition was financed by the Maple Leaf Sports & Entertainment shares sale in September for $3.48 billion (US) and intends to maintain its annual common stock dividend at the current level. Yet, BCE's shares fell about 9% as some analysts said the proceeds from selling the company's stake in MLSE will not be used to pay down debt. This can also be explained by BCE’s announcement that the sale of professional sports assets appeared to alleviate some of the concerns of investors and analysts about the financial health of Canada’s largest telecommunications company. They were particularly concerned about the persistence of a high level of debt and its ability to maintain the amount of dividends paid to its shareholders. Â
In the BCE acquisition of Ziply Fiber, the companies announced plans to retain Ziply Fiber's current operations and team structure. After the deal closes, Ziply Fiber will operate as a separate business unit under the BCE umbrella, maintaining its headquarters in Kirkland, Washington. BCE intends to leverage the expertise and operational practices of Ziply Fiber’s team to expand its fiber footprint in North America.
Long-Term Upsides
For Bell Canada, the BCE acquisition of Ziply Fiber offers substantial long-term benefits. First, the agreement allows Bell to gain a significant presence in the American broadband market, with a focus on the Pacific Northwest's neglected fiber-internet sector. This complements Ziply Fiber's emphasis on rural and suburban areas, putting Bell in a position to benefit from the rising demand for dependable, fast internet in these regions. The acquisition expands Bell's reach and confirms its position as North America's third-largest fiber internet provider, with over 1.3 million fiber locations and aspirations to reach three million within four years.
Bell strategically uses its operational knowledge of fiber rollout to promote growth and efficiency. Combining Ziply's network with Bell's resources produces economies of scale, which could lower the cost of maintaining and deploying infrastructure. The growth diversifies Bell's operating footprint and income streams, which reduces the risks related to its geographic reliance on the Canadian market.
The agreement also fits with patterns of rising internet usage. Fiber has a sustained competitive advantage over fixed wireless and satellite solutions due to the growing demand for ultra-fast and dependable internet and the growth of remote work, cloud services, and streaming.
Bell's foray into a less crowded, underserved market presents a chance for significant subscriber growth and market distinction despite fierce competition. By reaching 12 million fiber locations by 2028, the acquisition helps BCE accelerate its leadership in fiber infrastructure across North America and gradually increase shareholder value.
Risks and Uncertainties
BCE's acquisition of Ziply Fiber presents significant strategic opportunities, risks, and uncertainties. Regulatory obstacles are the biggest since the agreement needs to be approved by the federal (FCC) and state utility commissions in Washington, Oregon, Idaho, and Montana. These organizations will evaluate if the purchase benefits the general public and doesn't hurt competition. The lengthy procedure, which could take years, could lead to BCE's entry into the U.S. market needing to be completed on time, outright rejection, or imposing stringent restrictions.
Another concern is financial uncertainty. The profits from the sale of Maple Leaf Sports & Entertainment (MLSE) and a discounted Dividend Reinvestment Plan (DRIP) will be used by BCE to finance the C$7 billion transaction. However, if the MLSE transaction is postponed, BCE might have to take out a $3.7 billion loan from the US, which would increase its debt load. Investors are already concerned about the DRIP plan because, despite its capital provision, it risks reducing shareholder value. The dividend growth stopped by BCE increases shareholder worry even more.
Operational difficulties are also substantial. Ziply Fiber's "fiber-first" strategy focuses on underserved, rural locations where low population density and high deployment costs could hamper profitability. Ziply's expansion is threatened by competition from cable companies, Fixed Wireless Access (FWA), and satellite internet substitutes like Starlink. Although fiber offers faster speeds, the need for ultra-fast internet in these places still needs to be discovered.