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T-Mobile US could create $4 billion fibre business

T-Mobile US is reportedly working on plans to roll out its own fibre network, creating a new business unit that could be worth as much as US$4 billion.

The news comes from Bloomberg, whose sources say the mobile operator is looking for a partner that would enable it to build out the new infrastructure, and has hired Citigroup to help it find likely candidates. It is working towards either a joint venture or a commercial partnership, they claim, while adding the usual caveats that talks are at an early stage and may not result in a deal.

The newswire noted that T-Mobile’s desire to get into the fibre broadband game will require several billions of dollars worth of investment, with one of its sources putting the figure at $4 billion. That sounds about right; fibre doesn’t come cheap and even with a targeted rollout, there is a lot of the US to cover.

But it seems that T-Mobile will not foot the entire bill itself. Far from it, in fact. The telco could “chip in” on part of the multi-billion-dollar spend, Bloomberg said.

Recent history suggests there will be no shortage of potential investors willing to partner with T-Mobile. Much of the action to date has been in Europe: Vodafone secured an investment partnership with Altice in Germany; Liberty Networks began ploughing cash into fibre infrastructure in the same market; and in Austria Deutsche Telekom’s Magenta Telekom brokered a deal with investor Meridiam to spend an extra €1 billion on fibre. Those deals – and others – all came in the past couple of months.

Investors still love putting their cash into infrastructure, and that is doubtless the case across the Atlantic too.

And that’s good news for both T-Mobile and major rival AT&T, which less than a month ago was also named as being on the hunt for a fibre investor. AT&T 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.

In AT&T’s case though, inking a JV would be about expanding and potentially accelerating its existing fibre network rollout. For T-Mobile, we’re talking about an entry into a whole new market.

Well, sort of.

The operator has already dipped a toe into the water, piloting a fibre-to-the-home (FTTH) network in New York earlier this year. It has also explored partnerships with other FTTH providers, including cable operators and other telcos Bloomberg’s sources say.

In addition, T-Mobile has made a fair amount of noise about its 5G-based home broadband service over the past six months. It launched a new fixed wireless access (FWA) service for consumers in May, accompanied by a marketing campaign through which it encouraged US Internet users to churn away from their existing providers.

The operator was particularly vocal in its assertion that US consumers are getting a raw deal from their fixed Internet providers, in terms of cost and service quality, and insisted that its mobile-based alternative would disrupt the market.

It will be interesting to see if that stance changes once it joins the fibre establishment.

 

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