By Ahmad Hathout
Bell announced Monday it has entered into an agreement to buy Ziply Fiber, representing a push by the telco into the United States’s northwest fibre internet market.
The value of the deal, expected to close in the second half of 2025 following regulatory approvals, is $7 billion – $5 billion in cash and $2 billion in Ziply debt. Bell said Ziply – the largest fibre provider in the U.S. pacific northwest serving Washington, Oregon, Idaho and Montana – is expected to bring in earnings before interest, taxes, depreciation and amortization of $400 million next year. Ziply also offers residential phone and TV and fibre internet, networking and voice services for businesses.
Bell’s President and CEO Mirko Bibic said in a call with analysts Monday that the company had been looking for investment opportunities following its announced accelerated capex program in Canada during the pandemic, which focused on building fibre to more locations faster than ever before. He said the company was reaching its goal of 8.3 million fibre passings by next year when the opportunity to buy Ziply came up, which he said emerged only “recently.”
Following the buy, Bell’s fibre footprint in the U.S. will be at least 1.3 million locations in the immediate term with existing plans to extend that to more than three million locations in the next four years, a press release said, adding Ziply will continue to operate as a separate business with its headquarters staying in Kirkland, Washington.
“Bell’s leadership and vision aligns perfectly with our commitment to improve the connected experiences of our communities through fast, reliable fiber Internet and a refreshingly great experience,” Ziply CEO Harold Zeitz said in a press release. “This acquisition enhances our growth strategy with the scale and experience of one of North America’s leading fiber operators. I’m also grateful for the support of our original partners at both Searchlight Capital and WaveDivision Capital.”
Ziply carries with it key advantages for Bell, according to the Canadian telco: It has a low amount of legacy copper left in the network, 82 per cent of its residential internet subscribers are on fibre, and it competes with one or fewer gigabit broadband providers across 93 per cent of its footprint. Currently, 64 per cent of Ziply’s telco footprint has fibre, according to Bell, with some plans offering download speeds of up to 50 Gbps – the fastest in the country.
According to Bell, the transaction will make it the third-largest fibre internet service provider in North American with nine million fibre locations and an objective of over 12 million passings by the end of 2028.
Bell executives said in the Monday call that the U.S.’s fibre deployment and customer penetration “significantly lag” Canada’s, so there’s lots of growth opportunity there. About 51 per cent of U.S. homes have an option of fibre service versus 75 per cent in Canada, Bell said.
“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,” Bibic said in a press release. “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.”
Bell said it is using $4.2 billion of the net proceeds from the sale of its stake in Maple Leaf Sports & Entertainment (MLSE) in September toward the acquisition. Bell said it has a delayed-draw loan vehicle from which to pull money in the event the MLSE deal closes after the Ziply deal.
The telco said it is also in the process of divesting north service provider subsidiary Northwestel to an indigenous consortium for $1 billion. With the close of that transaction and MLSE, Bell said it expects to maintain its net debt leverage ratio, but will maintain the existing dividend in the meantime to keep that ratio in line.
On the domestic front, Bell still has some outstanding homes to which it needs to connect with fibre. The company has stated it still has some five million households to get to with the advanced wireline technology, and had urged the regulator to ensure it factors that point in before it moves to mandate bundled middle- and last-mile access to its fibre facilities, the interim rate of which was approved last month.
Bell had pulled back on its fibre investment plan in November 2023 after the CRTC mandated that fibre access on an interim basis. Part of that pull-back included up to $600 million in fibre investment cuts this year and a reduction of its fibre build target from nine to 8.3 million homes in 2025.
