AT&T is working on a US$15 billion fibre JV

AT&T is the latest international telecoms operator believed to be looking to partner up to fund faster fibre rollout and this deal – if it comes to fruition – is set to be a big one.

The US operator is working with Morgan Stanley with a view to bringing in an infrastructure partner to a planned fibre joint venture that would be valued at between US$10 billion and US$15 billion, Bloomberg reported, citing unnamed sources familiar with the matter.

Discussions with potential infrastructure investors are at an early stage and could still amount to nothing, the newswires sources cautioned.

However, they also noted that the telco could find a partner before the end of this year, if not next, which perhaps suggests that while talks may be preliminary, there is some substance behind them. Naturally though, there has been no official comment from either AT&T or Morgan Stanley.

The JV will apparently spend billions of dollars rolling out fibre, which pretty much encapsulates why AT&T is looking for an investor in the first place. Like its fellow operators around the world, AT&T is keen to share the financial burden with a partner, while an investor will – doubtless…although there will be plenty of T&Cs to hammer out – be keen to share the potential rewards.

AT&T is making a renewed push into connectivity, having U-turned on a multi-year strategy to transform itself into a media and content outfit some 18 months ago. The operator pulled the plug on its ownership of WarnerMedia last spring, brokering a merger deal with Discovery, and revealed a new strategy that would see it concentrate on fixed broadband and mobile services.

That merger closed in April this year, around the same time AT&T was expanding on its plans to pump eye-watering sums of money into its networks. It shared its target of doubling its fibre footprint to more than 30 million locations at an annual run rate of 3.5 million-4 million, in addition to some ambitious 5G coverage goals. Both strands of the network expansion endeavour would suck up capex of $24 billion in 2022 and 2023, AT&T said, followed by a spend of around $20 billion from 2024 onwards.

Back then it wasn’t talking about bringing in new investors to fund fibre growth – at least, not publicly – but with those kinds of projected spending figures it can come as no surprise to industry watchers that such a plan now seems to be on the cards…particularly given that everyone else seems to be at it.

Just days ago Vodafone announced a partnership with Altice that will see the pair create FibreCo, a joint venture company that will roll out fibre-to-the-home (FTTH) to 7 million homes in Germany. The pair will share the risks and the rewards of a plan that will see them spend as much as €7 billion on network rollout.

Meanwhile, earlier this month Telenor agreed to sell a 30% stake in its multi-billion-dollar spun-out passive fibre infrastructure business to investment group KKR. That’s a different type of deal, but it is still indicative of the way telecoms operators are cosying up with the investment community when faced with hefty network spending.

AT&T is the latest to – reportedly – make such a move, but it is unlikely to be the last.


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