T-Mobile US Inc. is in discussions with a unit of Tillman Global Holdings LLC to build out a fiber-optic network, setting the stage for the No. 2 US wireless carrier to enter the landline broadband business.
(Bloomberg) — T-Mobile US Inc. is in discussions with a unit of Tillman Global Holdings LLC to build out a fiber-optic network, setting the stage for the No. 2 US wireless carrier to enter the landline broadband business.
This would be the biggest bet yet T-Mobile has made in fiber-optic infrastructure, and put the wireless giant closer to competing directly with cable providers like Comcast Corp. and Charter Communications Inc.
A deal would make T-Mobile an anchor tenant in a newly formed infrastructure joint venture between Tillman FiberCo and private equity firm Northleaf Capital Partners, according to people familiar with the situation. The $500 million agreement between Tillman and Northleaf was first reported by Bloomberg on Aug. 10.
Read More: T-Mobile Seeks Fiber-Optic Venture Aimed at Home Internet
Bellevue, Washington-based T-Mobile has captured much of the growth in the wireless and home broadband markets the past two years. A move into fiber would allow it to enter an expanding adjacent market and position itself against competitors Verizon Communications Inc. and AT&T Inc., both of which have established fiber-optic broadband offerings. T-Mobile had been exploring ways to enter the fiber market either through private financing or a commercial partnership since late last year.
After its takeover of Sprint Corp in 2020, T-Mobile got a two-year jump on its wireless rivals in 5G network buildout and has been using its network advantage to lead the industry in growth. As it matured, the company set its sights on new areas like broadband to expand beyond phone service. With 5G, T-Mobile was able to beam signals into homes and quickly capture 4.1 million internet subscribers.
Earlier this month, T-Mobile Chief Executive Officer Mike Sievert suggested that fiber might be the next step. He told investors at a conference in San Francisco that he saw limits to how far the company’s wireless home internet service could go against cable and fiber competition. “We’re not going to change the broadband world with that offer,” he said.
T-Mobile has been testing a fiber-to-home service in parts of New York and Colorado through partnerships under the T-Mobile Fiber brand. The company has also been exploring a “capital-light way to enter that business and take advantage of our embedded customer base and our fantastic brand,” Sievert said.
Under the agreement, Tillman, financed by Northleaf, would build out network infrastructure to various neighborhoods and business districts and fill orders to connect homes and companies with fiber. T-Mobile’s role would be to find internet subscribers and provide them with Wi-Fi equipment and customer support and billing for the T-Mobile-branded fiber service.
Read More: Tillman FiberCo Strikes $500 Million Deal to Build Network Infrastructure
Tillman FiberCo CEO Ken Dixon has said the company is initially targeting parts of Nevada, Arizona, Colorado, Texas and Florida for its fiber buildout.
T-Mobile’s partnership follows AT&T’s fiber joint venture with BlackRock aimed at helping the phone giant expand to areas outside its 21-state territory. Verizon, which has been selling fiber to the home service through its Fios division for more than 20 years, has limited its reach largely to the US Northeast region.
Dixon, the Tillman FiberCo CEO, was previously a president of Verizon’s Fios business. Five of his top executives are Verizon veterans.
Phone and cable companies are competing for revenue from new internet sign-ups and eyeing some of the nearly $100 billion in federal money to help expand US broadband service and bridge the digital divide.
Late last year, T-Mobile hired Citigroup Inc. to find a fiber partner for a venture that could be worth $4 billion, Bloomberg News reported.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.