BCE: We Don’t Like the Ziply Fiber Acquisition

We were surprised by BCE’s plan to acquire Ziply Fiber. Although the agreement expands BCE’s fiber network, we see little synergies between its Canadian fiber network and Ziply’s US Pacific Northwest operations. Additionally, we think the deal comes at a costly time for BCE, which has targeted balance sheet reduction after its MLSE sale, and as dividend growth—a key pillar of its capital allocation strategy—will take a back seat through 2025. However, the transaction isn’t large relative to BCE’s existing size, and we don’t expect to materially change our CAD 60 fair value estimate. While we don’t like this acquisition, we believe the market has overly punished the stock.