Update On BCE; Down Near 8% On TSX As Co Pauses Dividend Growth As Part of Ziply Fiber Deal
09:36 AM EST, 11/04/2024 (MT Newswires) -- BCE Inc. (TSX and NYSE: BCE), a Canadian communications company, was at last down 8% in early trade on the TSX, Monday, amid news that its wholly-owned subsidiary, Bell Canada, agreed to acquire Ziply Fiber, a fibre Internet provider in the Pacific Northwest of the United States, for approximately $5.0 billion in cash and the assumption of outstanding net debt of approximately &2.0 billion.
Still, maybe investors have also noted that while BCE intends to maintain its annual common share dividend at the current level of $3.99 per share during the financial year ending December 31, 2025 -- in the context of the strategic acquisition of Ziply Fiber, BCE intends to pause dividend growth until BCE's dividend payout and net debt leverage ratios are "tracking towards our target policy ranges, subject to review annually by the BCE Board of Directors".
BNN Bloomberg TV noted BCE's stock yields 8-9%.
On the acquisition, the company in a statement said this transaction "enhances Bell's growth profile and strategic position by giving it a foothold in the large, underpenetrated U.S. fibre market, while increasing its scale, diversifying its operating footprint and unlocking significant growth opportunities."
Among highlights, BCE said the deal will add near 1.3 million fibre locations and "reinforce Bell's position" as third-largest fibre Internet provider in North America with a total of 9 million fibre locations and an objective to reach over 12 million fibre locations by end of 2028.
Bell will use an estimated $4.2 billion net proceeds from the sale of its ownership stake in Maple Leaf Sports & Entertainment (MLSE) towards funding the acquisition.
Price: 40.83, Change: -3.98, Percent Change: -8.88