According to reports, T-Mobile is working with Citigroup to find a partner and plans to invest up to $4 billion to build a fiber optic network in unspecified areas of the United States. Calculated by the number of users, T-Mobile is the second largest mobile communication operator in the United States, but it is the only operator that does not own a wired network.
The news coincides with AT&T's recent discussions with infrastructure investors to further expand its massive fiber-optic network, people familiar with the matter said. AT&T is said to be discussing a joint venture with a valuation of up to $15 billion and has hired Morgan Stanley to help attract investor interest. AT&T has committed to doubling its fiber coverage to about 30 million fiber access ports by 2025.
Planning to set foot in the fiber optic broadband market?
"We're open to whether our team, our ability to execute, our brand, and our 5G network can serve the broader market." T-Mobile CEO Mike Sievert was recently asked whether his company Express when interested in building fiber optics.
"We're certainly interested in peripheral businesses that can leverage all of these assets, including our physical and digital distribution capabilities." According to Seeking Alpha's transcript, Mike Sievert made the above remarks on T-Mobile's most recent quarterly conference call. . "We haven't drawn any conclusions yet, and I really can't answer whether the success of 5G FWA makes us more or less interested. The reasons are obvious, it could be both, so you'll want to stay tuned."
T-Mobile quietly launched T-Mobile Fiber in Manhattan last year, thereby setting foot in the fiber-to-the-home market. According to analysts at New Street Research, the company has partnered with Pilot Fiber to sell 950Mbit/s network connections, and the service currently covers 700 buildings.
T-Mobile management described the offering as a test to see if the company could still do business outside of FWA and smartphone service. "We'll be looking at these things, but we haven't come to any conclusions yet," Mike Sievert said of T-Mobile Fiber.
Of course, T-Mobile's existing 5G network is carried on top of fiber optic networks operated by other companies, and T-Mobile leases these network connections. From the perspective of T-Mobile management, these leases are relatively cheap. In fact, T-Mobile recently sold the former Sprint's long-distance fiber-optic network and related assets to Cogent for $1.
According to analysts at New Street Research, T-Mobile's $4 billion investment in fiber could reach between 1 million and 4 million homes, depending on whether it seeks government subsidies. Analysts also speculate that T-Mobile may partner with existing fiber providers, such as Frontier.
The growing boom in fiber optic construction
T-Mobile's interest in fiber is no surprise. AT&T, Frontier, Altice, Lumen Technologies, Shentel, and other U.S. telecom operators are in various stages of building new fiber optic networks everywhere.
The industry will also have billions of dollars in government subsidies designed to help build fiber optic networks in rural areas and help low-income Americans afford high-speed internet connections.
T-Mobile management has indicated that the company's 5G FWA service may be eligible for such subsidies, but the authorities have made it clear that they want to spend money on fiber first.
"We've been arguing for some time that in the long run, T-Mobile (and others) will need a terrestrial network," New Street Research analysts wrote in a note to investors this week. At this point, T-Mobile will need some type of cable network to build out its mmWave spectrum, in part to expand its FWA business.
If T-Mobile were to build a fiber optic network, it would join the likes of Verizon, AT&T, and Comcast in having both wireless and wired networks. In fact, such companies have been touting their ability to combine these businesses in innovative ways.
Tom Rutledge, Charter Communications' outgoing chief executive, said recently: "Our future opportunity is to blend our wireless and wireline businesses and sell them in a way that reduces our customers' bills, giving us a better product and price than our competitors, And give consumers packages they can't get elsewhere."
Indeed, Charter recently launched a wireless/wired bundle called "SpectrumOne."
However, investor interest in new fiber projects (even from Wall Street's "sweetheart" T-Mobile) is not high. For example, some banks recently scrapped plans to sell $3.9 billion in bonds meant to finance Apollo Global Management's acquisition of telecom assets from Lumen Technologies.
