Bell initially aimed for a much larger target than internet provider Ziply Fiber in its U.S. expansion, which cost a whopping $5 billion CAD.
According to sources speaking to the Canadian Press, Bell was in the running to acquire Frontier Communications, the largest fibre provider in the U.S., but lost to Verizon after a bidding war.
Four insiders familiar with the deal reported that Bell pursued Frontier for six months, offering between $8.5 billion ($11.8 billion CAD) and $9.2 billion US ($12.8 billion CAD), plus assuming Frontier’s $11.5 billion US ($16 billion CAD) debt. The plan? Frontier was going to let Bell contact big investors (like pension funds) to buy its stock to help finance the acquisition. That would have been Bell spending over $20 billion US (nearly $28 billion CAD) for Frontier.
However, as the bids ramped, Verizon upped its offer to $20 billion US, clinching the deal. Bell was identified as “Party E” among Frontier’s top bidders, wanting to use this opportunity to explore the U.S. market.
I wonder if Verizon ran ads knowing that a Canadian telecom wanted to enter the local internet picture.
Following the Frontier loss, Ziply Fiber’s owner invited Bell to bid for Ziply, which operates in the Northwestern U.S. Bell acquired Ziply at 14.3 times its earnings, a price that some analysts labeled “expensive,” while others noted it aligned with Verizon’s purchase cost for Frontier.
Bell believes that Ziply’s U.S. business could grow its earnings by 11% annually—higher than growth rates in Canada’s telecom industry.
Some industry experts question if Bell has fully accounted for the rising competition from fixed wireless internet in the U.S., which has become faster and more affordable with 5G advancements. Verizon, for example, offers a fixed wireless option in Seattle for around $25 US, compared to Ziply’s $45 US fibre service.
Experts also suggest Bell may benefit from U.S. federal funding aimed at expanding rural internet access, but the future of these funds is not guaranteed. Nevertheless, it’s a huge investment for Bell to jump into the big U.S. market, where it won’t have the protection it does in Canada.
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