BCE buy poised to accelerate Ziply Fiber's network buildout plan

　　Canada's BCE aims to establish its first fiber foothold in the US via its proposed acquisition of Ziply Fiber for about $5 billion in cash and debt. The transaction also aims to accelerate Ziply Fiber's already-aggressive fiber network buildout.

　　Ziply Fiber today extends fiber to about 1.3 million locations in parts of Washington, Oregon, Idaho and Montana, and had a five-year plan in place to broaden that reach to about 3 million locations through 2029.

　　In the wake of today's announcement, the new plan is to add a little bit to that overall buildout number and pull up the completion date by about a year.

　　"It is an accelerated plan," Ziply Fiber CEO Harold Zeitz tells Light Reading. "It's about a 20% to 25% acceleration on what we were planning on doing. We're well prepared for that."

　　Ziply Fiber has already built fiber to about two-thirds of its locations, a figure that is in constant flux as the operator builds fiber to towns and cities that are adjacent to its existing network infrastructure.

　　Ziply Fiber's buildout plan includes upgrades of existing network that came by way of its 2020 acquisition of a portion of Frontier Communications' footprint in the region, along with the aforementioned edge-out builds and Ziply Fiber's Regional Digital Opportunity Fund (RDOF) commitments.

　　Ziply Fiber is also pursuing builds tied to the Broadband Equity, Access, and Deployment (BEAD) program. But it's not a material part of the plan, said Zeitz, who will be staying at the helm of Ziply Fiber when the deal closes in the second half of 2025.

　　'Similar vision'

　　As for the timing of today's announced transaction, Zeitz said it fit well within the five-to-seven year window that private equity investors typically start to seek out new owners. Ziply's top investors include Searchlight Capital Partners and WaveDivision Capital, along with contributors such as Cable One.

　　Zeitz believes BCE offers the right cultural fit, in part because the Canadian operator likewise has embarked on a fiber buildout/upgrade plan of its own.

　　"We have a similar vision. We just want to bring the best and fastest fiber to more towns across the country, in particular within our four states," he said.

　　Mirko Bibic, president and CEO of BCE and Bell Canada, said he was likewise struck by how Ziply Fiber's strategy fit with BCE's own fiber endeavors.

　　BCE, he pointed out, started on its own fiber journey in 2010 and accelerated that plan in 2020 amid the COVID-19 pandemic. Bibic said that "fiber-first" focus has been a game-changer for BCE in Canada. BCE's success with fiber caused the company to cast its eyes toward the US as the Canadian operator inched closer to reaching a fiber buildout target that's expected to be complete in 2025.

　　"We've seen very impressive revenue, EBIDTA and subscriber gains on fiber Internet, and we see that being paralleled by Ziply Fiber," Bibic said. "I think with BCE's scale combined with the expertise of the Ziply Fiber team, we can accelerate that [buildout] even faster than what was in Ziply Fiber's prior base case. I think that's how it all fits together for us."

　　With Ziply Fiber entering the mix, BCE is on a path to expand its fiber footprint to more than 12 million locations in North America by 2028.

　　The Ziply transaction is BCE's first fiber-focused deal in the US. Cable history buffs may recall that Bell Canada briefly entered the US cable business in 1994 when it acquired 30% of Jones Intercable, a top ten US cable operator at the time. Comcast later acquired Bell Canada's stake followed by a controlling stake in Jones Intercable in 1999.

　　New Street Research believes that BCE also explored a bid for Frontier Communications, which is in the process of being acquired by Verizon Communications.

　　Bibic didn't comment about BCE's purported past interest in Frontier, but said BCE will be keeping its eyes open for other fiber-related M&A.

　　"Should other opportunities come up, we'll take a good, strong look at it," he said. "We now have the benefit of local market expertise that can help guide us through that process."

　　The urge to converge?

　　For now, it's not clear how mobile – and a possible wired/wireless convergence play – might eventually fit into the picture at Ziply Fiber. Thus far, Ziply Fiber has been laser-focused on its fiber buildout strategy.

　　"It's certainly something that we think about," Zeitz said of the potential to add mobile to the bundle. "And if it's something we think is necessary to add, we will. But we're not in a hurry to do that."

　　He allowed that BCE, which has about 2.88 million mobile device subscribers, could help Ziply Fiber pursue mobile – when and if it made sense.

　　Bibic said it's clear that consumers will always choose a better broadband service, even if it means they take wireless from another provider. But he also said BCE's situation in Canada, where BCE is a wireline operator in 75% of the country, is much different than Ziply Fiber's situation in the northwestern US.