Bell acquires U.S. telecom; Eastlink buys in Northern Ontario

BCE Inc. has moved into the Pacific Northwest of the United States with the purchase of Ziply Fiber of Kirkland, Washington. Bell will pay C$5 billion and assume a further C$2 billion of Ziply’s debt. The American firm has operations in Washington, Oregon, Idaho, and Montana. “The U.S. is a natural expansion market for BCE,” Bell CEO Mirko Bibic told an analyst call Monday, Nov. 4. “We plan to bring the best of Bell and the best of Canadian innovation and competitiveness beyond our traditional borders to provide increased scale and geographic diversification.” The move will add about 1.3 million fibre locations to Bell’s network. It currently reaches 7.7 million households in Canada. The company hopes to achieve 12 million locations by the end of 2028. Bell will be using the funds from the sale of its $4.7 billion stake in Maple Leaf Sports and Entertainment (MLSE) to Rogers Communications Inc. to pay for the Ziply takeover. Although it was thought the telecom would be reducing debt, Bell left itself an out when announcing the MLSE sale in September. “BCE currently intends to direct proceeds of this sale towards reducing debt levels and to support its ongoing transformation from telco to techco with a focus on core growth drivers,” the company said at the time. Bell CFO Curtis Millen said he thinks the Ziply deal falls under the latter category. He expects it to close in the second half of 2025. The sale must be approved by the Federal Communications Commission and state utility boards. “I do think that growth will continue to accelerate as they continue to build out more fibre and frankly penetrate the fibre that’s been built,” he told analysts during the call. If the MLSE transaction has not been finalized by the time Bell closes the Ziply deal, BCE will rely on a delayed-draw term loan. Bibic noted that dividend growth will be paused but stressed that the company board of directors reviews the dividend payout annually. The CEO said the Ziply purchase was too good to pass up and did not rule out similar acquisitions in the future. The American market currently has 51 per cent adoption of fibre versus 75 per cent in Canada, he added. “The news of a U.S. acquisition comes as a surprise and at a time when Bell is underperforming its domestic peers,” Adam Shine of the National Bank of Canada wrote in a note. The analyst said that Bell is facing competitive challenges in Canada which have undermined growth and sector valuations. “While investors have already been dealing with these domestic issues, it will now require some time to digest the news of a foray to the U.S. Pacific Northwest,” Shine concluded. “As such, we expect BCE shares to remain under pressure for the next several quarters.” Eastlink acquires Sudbury-based Sunwire’s services Later the same day, Bragg Communications Inc. subsidiary Eastlink announced the purchase of Sunwire’s home internet, television and phone services in Sudbury and Timmins, Ont. and the surrounding areas. No sale price was given. “Sunwire will continue to provide innovative solutions and exceptional service to our business customers as we put all our focus towards our SolSwitch communications platform, cybersecurity & IT, structured cabling and business internet,” said Sunwire CEO Jason Legault in a news release. ppark@thewirereport.ca

Bell acquires U.S. telecom; Eastlink buys in Northern Ontario

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By Paul Park
| November 4, 2024

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