Bell eyes U.S. fibre expansion after closing Ziply deal and boosting internet subs

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The closing of BCE Inc.’s $5-billion purchase of U.S. internet provider Ziply Fiber in August helped boost the telecom giant’s fibre internet subscription base in its latest quarter, as it aims to accelerate its infrastructure build south of the border.

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Bell Canada’s parent company said Thursday it added 65,000 net new fibre subscribers in its third quarter, including U.S. operations.

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Based in Kirkland, Wash., Ziply Fiber offers fibre internet service in the U.S. Pacific Northwest, including Washington, Oregon, Idaho and Montana. Ziply added 9,000 net new fibre customers in August and September, its first two months officially under BCE’s ownership.

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Its acquisition by Bell was funded largely though proceeds of BCE’s $4.7-billion sale of its stake in Maple Leaf Sports & Entertainment to rival Rogers Communications Inc. — a deal that also closed earlier in the quarter.

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BCE president and CEO Mirko Bibic said Ziply is now well-positioned to accelerate its fibre build and expand beyond its current four-state footprint.

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He told analysts on Bell’s earnings call that fibre line construction is set to ramp up through 2026. Ziply’s fibre network currently passes 1.4 million American homes, which BCE expects to grow to approximately three million by the end of 2028.

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Bibic said that in the longer term, BCE plans to expand its U.S. fibre footprint to eight million homes “and we’ll do that in a cost-efficient manner.”

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“We’re very pleased with Ziply’s performance and we’re looking forward to continued growth,” he said.

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“The key thing is that it continues to perform ahead of our investment case and … as we ramp the build in 2026, that’s just going to lead to better subscriber revenue.”

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Back in Canada, Bell is also seeking to grow its fibre customer base in new provinces, however that comes in the form of reselling rivals’ service through existing infrastructure. Bell announced last month will soon begin offering home internet in Alberta and B.C. — reselling fibre from Telus’ network under the CRTC’s wholesale framework.

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Bell chief financial officer Curtis Millen said those rules offer “an opportunity for us,” despite the company having long fought against them unsuccessfully.

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“Obviously our position is pretty clear on the rules and we favour regulation that incents investment,” Millen said in a phone interview.

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“But the rules are the rules. We have to compete in the environment that is in front of us.”

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Bibic said a trial is underway for customers in Kelowna, B.C. and the company expects its full launch in Western Canada by January. He reiterated the offering will initially be available to Bell’s “highest value” mobile customers in those provinces, with special pricing for bundled packages.

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In Ottawa, there’s hope that Canadian telecommunications companies will expand their fibre network footprints at home too.

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The federal government’s latest budget unveiled Tuesday included an announcement of measures aimed at incentivizing those network builds, as part of the Liberals’ plan to spur investment through increased capital project spending.

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The budget mentioned a new “dig once” policy approach to the government’s planned “nation-building projects.” Ottawa said that would encourage telecom companies to co-ordinate when installing fibre optic lines as part of the development of major projects.