Sun Nov 10 15:10:00 UTC 2024: ## BCE’s US Expansion Sends Shares Plunging, Dividend Growth Halted

**Montreal, Canada** – In a move that stunned investors, BCE Inc., Canada’s largest telecommunications company, announced the acquisition of US-based internet provider Northwest Fiber LLC, sending its shares plummeting to a 12-year low. The $3.6 billion deal comes with a surprising caveat: BCE will pause its dividend growth for the entire year of 2025, a decision that has sparked significant concern among shareholders.

The acquisition of Northwest Fiber, which operates under the name Ziply Fiber, grants BCE access to 1.3 million locations in the Pacific Northwest, with plans to expand to over 3 million in the next four years. This expansion comes on the heels of BCE’s recent sale of its stake in Maple Leaf Sports & Entertainment Ltd., a move initially intended to reduce debt. However, the company will now utilize the $4.2 billion proceeds from this sale to primarily fund the Northwest Fiber acquisition.

BCE’s decision to halt dividend increases has been met with disapproval from analysts and investors, who traditionally view steady dividends as a cornerstone of their investment in Canadian telecom giants. Shares plunged 9.7% on Monday, closing at their lowest point since May 2012.

Despite the market’s negative reaction, BCE CEO Mirko Bibic insists the decision to acquire Ziply is strategically sound, emphasizing the long-term growth potential of the fiber market in the Pacific Northwest. He assures investors that the company is “managing this for the long term” and that the US expansion aligns with BCE’s core strengths.

Analysts remain skeptical. Scotia Capital’s Maher Yaghi describes the deal as “perplexing” due to the high price tag and its potential to dilute BCE’s free cash flow. He argues that investors prioritize dividends in the Canadian telecom sector and that the acquisition could jeopardize future dividend increases.

The acquisition marks BCE’s foray into the US market and could represent a larger strategy of expanding its fiber network across North America. However, the immediate impact on the company’s stock and the uncertainty surrounding future dividend growth have left investors with a sense of unease. The market is expected to carefully monitor BCE’s performance in the coming months as it navigates this uncharted territory.

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