T-Mobile Eyes Fiber-Optic Expansion, Gearing Up to Challenge Cable Titans

Benzinga · 09/15/2023 12:06

T-Mobile US Inc (NASDAQ:TMUS) is exploring a significant foray into the fiber-optic network arena through discussions with Tillman FiberCo, a Tillman Global Holdings LLC unit. 

This potential partnership could mark T-Mobile's most considerable venture into fiber-optic infrastructure, positioning it to directly challenge cable providers like Comcast Corp (NASDAQ: CMCSA) and Charter Communications Inc (NASDAQ: CHTR).

Also Read: T-Mobile Expands Network Horizons: Acquiring Comcast Airwaves in $3.3B FCC-Backed Deal

If the deal materializes, T-Mobile will become an anchor tenant in a new infrastructure joint venture involving Tillman FiberCo and private equity firm Northleaf Capital Partners, which announced a $500 million deal earlier this year, Bloomberg reports

The move into the fiber market aligns with T-Mobile's strategy to diversify its services beyond wireless communications.

Following acquiring Sprint Corp in 2020, T-Mobile gained an early advantage in 5G network deployment. 

It leveraged this edge to secure 4.1 million internet subscribers through its wireless home internet service. However, T-Mobile CEO Mike Sievert acknowledged limitations in competing with cable and fiber offerings, hinting at the company's interest in fiber expansion.

T-Mobile has been piloting a fiber-to-home service in select areas, exploring various avenues to enter the market, including partnerships and private financing. 

Under the potential agreement with Tillman FiberCo, T-Mobile would focus on customer acquisition, providing Wi-Fi equipment, and customer support and billing for its branded fiber service.

Tillman FiberCo CEO Ken Dixon expressed plans to target regions in Nevada, Arizona, Colorado, Texas, and Florida for its fiber buildout.

This move by T-Mobile comes as AT&T Inc (NYSE:T) and Verizon Communications Inc (NYSE:VZ) have also been expanding their fiber-optic offerings to capture new internet subscribers and tap into federal funding to enhance broadband access nationwide.

In July, T-Mobile US reported second-quarter revenue of $19.2 billion, a decline of 2.6% year-on-year, missing the consensus of $19.3 billion. EPS of $1.86 beat the consensus of $1.69.

Price Action: TMUS shares traded lower by 1.13% at $141.50 premarket on the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.