BCE and PSP Investments Forge Fiber Dominance with Network FiberCo: A Strategic Play for U.S. Broadband Leadership

The telecommunications landscape is undergoing a seismic shift as broadband providers race to meet soaring demand for high-speed internet. In a bold move, BCE Inc. and PSP Investments have unveiled a partnership to form Network FiberCo, a joint venture aimed at accelerating fiber infrastructure deployment in underserved U.S. markets. This strategic alliance, backed by a potential $1.5 billion+ investment, marks a pivotal moment in BCE’s push to expand beyond its Canadian roots and capitalize on the U.S. fiber broadband boom.

The Partnership: Structure and Financial Commitments

Network FiberCo will be owned 49% by BCE (via its soon-to-be-acquired subsidiary Ziply Fiber) and 51% by PSP Investments, which is deploying funds from its High Inflation Correlated Infrastructure Portfolio (HICI). The venture’s financial backbone includes non-recourse debt financing, which is expected to constitute the majority of its capital over time. This structure shields BCE’s balance sheet while enabling scalable growth.

PSP’s $1.5B+ commitment underscores its confidence in the U.S. fiber market, where penetration rates lag behind Canada’s—creating a fertile ground for infrastructure investment. For BCE, the partnership offers a capital-light path to expand its footprint without straining its financial resources.

Strategic Objectives: Building the Fiber Future

The partnership’s primary goal is to deploy up to 8 million fiber passings—a massive leap from Ziply Fiber’s current 3 million passings. Initial targets include:
- 1 million passings in Ziply’s existing service areas.
- Up to 5 million additional passings in underserved markets, leveraging cost-efficient construction and secular demand trends.

This expansion will focus on last-mile fiber deployment outside Ziply’s core territories, ensuring operational synergy while minimizing overlap. Ziply Fiber, once fully owned by BCE, will remain the exclusive ISP for Network FiberCo’s infrastructure, maintaining service continuity.

BCE’s track record of disciplined capital allocation and steady dividends (historically yielding ~4.5%) positions it well to manage risks while pursuing growth. The non-recourse financing structure further insulates its financial stability.

Why the U.S. Fiber Market Matters

The U.S. broadband sector is a $200 billion+ industry, with fiber penetration at just 40%—far below Canada’s 75%. This gap presents a massive opportunity for Network FiberCo to capture market share. BCE’s CEO, Mirko Bibic, emphasized the venture’s alignment with “capital efficiency and long-term accretion”, while PSP CEO Deborah Orida highlighted its inflation-hedging potential for Canadian pensions.

Risks and Regulatory Hurdles

Despite the optimism, challenges loom. The partnership’s success hinges on BCE’s pending acquisition of Ziply Fiber closing by late 2025—a process that could face regulatory scrutiny. Additionally, achieving the 8 million passing target depends on navigating construction costs, competition from rivals like Altice USA (ATUS) and Frontier Communications (FTR), and shifting consumer demand.

The Bigger Picture: Diversification and Long-Term Value

For BCE, this isn’t just about U.S. growth—it’s about reducing reliance on Canada’s saturated market and mitigating regulatory risks. The venture also creates a platform for acquisitions, allowing BCE to scale organically or through bolt-on deals. Meanwhile, PSP’s majority stake secures a stable, inflation-protected asset in a portfolio skewed toward volatile equities.

Conclusion: A Shrewd Move with High Upside

Network FiberCo represents a masterclass in strategic partnership design. By leveraging BCE’s operational expertise and PSP’s financial firepower, the venture targets $2 billion in incremental revenue by 2030 (assuming average U.S. broadband ARPU of $60 per connection). With Ziply’s proven track record (2024 EBITDA growth of 18%) and a capital structure that prioritizes financial discipline, the partnership is positioned to deliver value for both investors and customers.

While risks remain, the 8 million passing target—if achieved—would establish BCE as a U.S. fiber powerhouse. For investors, this is a bet on secular trends in connectivity demand, regulatory tailwinds for infrastructure projects, and a partnership that balances ambition with prudence. In an era where fiber is the backbone of the digital economy, BCE and PSP have laid the groundwork for leadership.

With the U.S. lagging Canada by 35 percentage points in fiber adoption, the path to dominance is clear—and BCE is paving it.