The Final Frontier: Comparing the Fiber Strategies of the Big Three U.S. Mobile Operators

Verizon’s shock agreement to acquire ISP giant Frontier Communications in a $20 billion all-cash deal looks set to herald a new era of fixed-mobile convergence in the U.S. telecom market.

The takeover—which is expected to close in 18 months, subject to regulatory approval—follows a series of eye-catching fiber-related announcements involving chief rivals AT&T Communications and T-Mobile US.

Today, we take a look at the respective fiber strategies of the “Big Three” U.S. mobile operators.

AT&T Communications

Headquarters: Dallas, TX

Homes Passed with Fiber (June 2024): 27.8 million homes and businesses  

AT&T’s first commercial fiber-to-the-node (FTTN) services were introduced in San Antonio, Texas in June 2006. In June 2007, the telco contracted Alcatel-Lucent and Ericsson to provide equipment for an expansion of its fiber network. The vendors supplied GPON equipment in new-build residential areas, with the first deployments carried out in early 2008.

In subsequent years, AT&T has turned its attention toward its fiber-to-the-home (FTTH) deployment, which now supports multi-gigabit download/upload speeds. With its fiber rollout progressing at pace, in December 2022, AT&T and BlackRock agreed to form a joint venture (JV) that will operate a commercial FTTH platform.

The newly formed Gigapower unit expects to provide connectivity to ISPs and other businesses across the U.S. It will focus on serving customers outside of AT&T’s traditional 21-state fixed voice/broadband service footprint and leverage the telco’s nationwide mobile sales capabilities to sell fiber to customers in Gigapower territories.

The agreement was finalized in May 2023. An initial rollout focused on Mesa, Chandler, and Gilbert, Arizona extended AT&T’s footprint to a 22nd state. A 23rd state, Pennsylvania, received fiber coverage not long after.

The most recent development of note? In September 2024, AT&T and BlackRock shared that they are looking for opportunities to expand the fiber footprint of their Gigapower JV beyond the initial 1.5 million locations announced in December 2022. This expansion may include growth in its existing Gigapower locations as well as the addition of new geographies.

Also in September 2024, AT&T signed new wholesale agreements with four commercial open-access providers—Boldyn Networks, Digital Infrastructure Group, PRIME FiBER, and Ubiquity—in an attempt to reach people in geographies not served by its own network or Gigapower.

The Boldyn agreement builds on AT&T’s existing collaboration with the company to modernize communications at military bases and has an initial focus on Texas. PRIME FiBER, backed by InLight Capital, is a newly established open-access fiber provider that will initially focus on Florida. Ubiquity has a multi-state footprint and focuses on multi-family communities and private homeowners’ associations. It will also build exclusive greenfield areas for AT&T, initially in Minnesota. Digital Infrastructure Group is a U.S. and Canada-based wholesale fiber developer that is in the process of expanding into unspecified new regions.

As of June 2024, AT&T claimed the largest FTTH network in the U.S., with infrastructure that passed 27.8 million customer locations.

As of June 2024, AT&T claimed the largest FTTH network in the U.S., with infrastructure that passed 27.8 million customer locations. AT&T is optimistic of expanding its FTTH footprint to 30 million homes passed by 2025.

Verizon Communications

Headquarters: New York, NY

Homes Passed with Fiber (June 2024): 17.8 million

In April 2004, Verizon Communications completed the buildout of its ADSL networks across its fixed voice footprint. Within three months, it initiated the deployment of a fiber access network. Under the brand name “FiOS,” the fiber-to-the-premises (FTTP) option launched in Keller, Texas in July 2004, offering initial download rates of up to 30 Mbps.

Today, Verizon passes 17.8 million locations with fiber and aims to pass 20 million by the end of 2026. Notably, the telco has made strong progress in terms of phasing out its legacy copper network.

As of June 2024, just 254,000 fixed broadband subscribers were still connected to Verizon’s xDSL platforms, compared to 7.442 million using fiber and 3.815 million using fixed wireless access (FWA) technology.

In September 2024, Verizon entered into a definitive agreement to acquire Frontier Communications in an all-cash transaction valued at $20 billion. Under the terms of the agreement, Verizon will pay $38.50 per share in cash, representing a premium of 43.7% to Frontier’s 90-day volume-weighted average share price on September 3, 2024 (i.e. the last trading day prior to media reports regarding a potential acquisition of Frontier).

Verizon will gain access to Frontier’s customer base in markets it finds “highly complementary” to its existing Northeast and Mid-Atlantic markets. Frontier’s 2.2 million fiber subscriptions across 25 states will join Verizon’s 7.4 million Fios connections in nine states and Washington, DC. In addition to Frontier’s 7.2 million fiber passings, the company is committed to build out an additional 2.8 million fiber locations by the end of 2026.

The transaction is expected to close in approximately 18 months—subject to approval by Frontier shareholders, receipt of certain regulatory approvals, and other customary closing conditions. Verizon expects to realize at least $500 million in run-rate cost synergies by year three, from benefits of increased scale and distribution and network integration.

Curiously, the deal serves to unwind a pair of strategic Verizon divestments that took place in the last 15 years. Back in May 2009, Verizon agreed to spin off assets in 14 states to Frontier; that transaction closed in mid-2010.

Subsequently, in February 2015, Frontier agreed to pay $10.5 billion for Verizon’s local fixed line operations in California, Florida, and Texas. The transaction comprised $9.9 billion in cash and $600 million in assumed debt. The deal closed in April 2016.

After the ill-fated acquisitions—and subsequent divestments—of internet firms AOL (2015) and Yahoo! (2017), Verizon has focused on its core telecom business in recent years.

Its last major acquisition was the $6.25 billion takeover of MVNO giant TracFone Wireless in 2021. That deal allowed Verizon to gain a foothold in the pre-paid market and achieve parity with T-Mobile and AT&T, which have enjoyed great success in the pre-paid sector with their respective Metro by T-Mobile and Cricket Wireless sub-brands.

The Frontier deal also finds Verizon plugging a strategic hole in its portfolio, but only time will tell as to whether the $20 billion gamble pays off.

The Frontier deal also finds Verizon plugging a strategic hole in its portfolio, but only time will tell as to whether the $20 billion gamble pays off.

T-Mobile US

Headquarters: Bellevue, WA

Homes Passed with Fiber (June 2024): Not disclosed

In August 2021, U.S. cellular giant T-Mobile teamed up with Manhattan-based ISP Pilot Fiber to offer 940 Mbps FTTH services under the “T-Mobile Fiber” banner in the New York Metro Area.

FTTH connectivity was quietly extended to Northglenn and Pueblo, Colorado in April 2023, via a tie-up with Brookfield-backed Intrepid Fiber. The fiber play came a matter of months after T-Mobile launched a “5G Home Internet” FWA service and represented T-Mobile’s first steps into the fiber-optic arena.

Encouraged by its initial dalliances with fiber broadband, in September 2023, T-Mobile entered into discussions to become an anchor tenant on the FTTP network being rolled out by the newly formed joint venture between Tillman FiberCo and private equity firm Northleaf Capital Partners. Tillman FiberCo’s rollout will initially target parts of Nevada, Arizona, Colorado, Texas, and Florida.

In April 2024, T-Mobile and global investment firm EQT entered into a JV with EQT’s Infrastructure VI fund. This move—T-Mobile’s biggest fiber commitment to date—will see the pair acquire FTTH operator Lumos from EQT’s predecessor fund, EQT Infrastructure III. The JV will combine T-Mobile’s retail, marketing, brand, and customer experience strengths with EQT’s fiber infrastructure investment expertise.

The transaction is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals. At closing, T-Mobile is expected to invest approximately $950 million in the JV to acquire a 50% equity stake and all existing fiber customers. The funds invested by T-Mobile will be used by Lumos for future fiber builds.

After the transaction closes, Lumos—which currently reaches 320,000 households over 7,500 fiber route miles in the Mid-Atlantic—will transition to a wholesale model. T-Mobile will be the anchor tenant, owning customer relationships and leveraging its brand to attract new subscribers. T-Mobile’s future investments are expected to help Lumos to reach 3.5 million homes passed by the end of 2028.

Subsequently, in July 2024, T-Mobile partnered with global investment firm KKR to establish a JV that will acquire Indiana-based ISP Metronet, along with its fixed broadband infrastructure, residential fiber operations, and existing customer base. As part of the transaction, the JV will acquire Oak Hill Capital’s existing stake in the telco. Oak Hill will then reinvest to retain a minority position in the ISP, while company founder John Cinelli will also retain a minority position once the deal closes.

The transaction is expected to close in 2025, subject to customary closing conditions and regulatory approvals. At closing, T-Mobile is expected to invest approximately $4.9 billion to acquire a 50% equity stake in the JV and 100% of Metronet’s residential fiber retail operations and customers, as well as funding of the JV. Following the transaction’s close, Metronet is expected to be self-funding on a go-forward-basis and reach 6.5 million homes passed by the end of 2030.

To support this business plan, T-Mobile does not expect to make any additional capital contributions to the JV. Metronet will become a wholesale services provider for its retail customers and 100% of its residential fiber retail operations and customers will transition to T-Mobile. T-Mobile will have full responsibility for residential customer acquisition and support, leveraging its differentiated retail, marketing, brand, and service model. Metronet will focus on build plans, network engineering and design, network deployment, and customer installation.

Metronet’s fiber network currently passes more than two million homes and businesses in 300 communities across 17 states. While an official figure has not been divulged, Metronet is believed to serve more than 480,000 fixed broadband subscriptions.

For its part, KKR already owns a stake in MetroNet, as does Oak Hill Capital Partners. Oak Hill has been a shareholder since 2014, while KKR came onboard in 2021.

In its most recent gambit, in August 2024, T-Mobile agreed to become an anchor tenant on FTTH networks built by SiFi Networks in selected locations in Wisconsin, Michigan, and California.

With so many moving parts in play, the true scale of T-Mobile’s future fiber portfolio is difficult to envision.

With so many moving parts in play, the true scale of T-Mobile’s future fiber portfolio is difficult to envision. While T-Mobile is unlikely to trouble AT&T, which proudly bills itself as “America’s largest and leading fiber provider,” the company has demonstrated that it is more than capable of taking the fight to its larger rivals in the mobile space.

Indeed, the combination of well-judged takeovers and aggressive rollouts saw T-Mobile transform itself from an also-ran to a major player in the span of a decade. Based on its recent endeavors, it appears that T-Mobile is intent on using the very same playbook to seize a share of the lucrative fiber market.