Proactive Investors - Bell Canada parent BCE Inc (TSX:TSX:BCE) has expansded south of the border with the acquisition of US Pacific Northwest-focused Ziply Fiber for C$7 billion.
The purchase, where Bell will pay C$5 billion in cash and take on C$2 billion of outstanding net debt, will add roughly 1.3 million fibre locations to take Bell to around 9 million fibre locations, reinforcing its position as the third-largest fibre internet provider in North America.
Bell said it will use some C$4.2 billion of the net proceeds from the sale of its ownership stake in Maple Leaf Sports & Entertainment (MLSE) towards funding the deal.
The company said the US fibre market is both large and underpenetrated, meaning the deal not only diversifies the company's operating footprint but also unlocks growth opportunities.
"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," said Mirko Bibic, CEO of BCE and Bell Canada.
Ziply Fiber's 1.3 million locations span four US states, with Bell planning to expand this to more than three million locations in the next four years.
The acquisition puts Bell on track to expand its fibre footprint to over 12 million locations across North America by the end of 2028, it said.
BCA said it expects to fund the balance of the purchase price from a discounted treasury DRP program, with a US$3.7 billion fully committed delayed-draw term loan facility as a backup.
Upon closing the acquisition and the divestitures of Northwestel and the MLSE ownership stake, BCE expects its net debt leverage ratio to remain "relatively unchanged".
While it plans to maintain its annual common share dividend at the current level of $3.99 per share during the 2025 financial year, BCE said it would keep the dividend flat until its dividend payout and net debt leverage ratios are tracking towards our target policy ranges, subject to annual board reviews.