T-Mobile expands fiber footprint with Metronet acquisition

　　T-Mobile and investment firm KKR have formed a joint venture (JV) to acquire fiber service provider Metronet.

　　The fiber provider reaches over 300 communities and more than 2 million homes in 17 states. Metronet is both a pure-play fiber company and independent FTTH operator. In some markets, Metronet delivers residential speeds up to 5 Gbit/s.

　　The acquisition includes Metronet's broadband infrastructure, residential fiber business operations and existing customers. The JV will acquire Oak Hill Capital's existing stake; Oak Hill Capital will re-invest for a minority position and Metronet CEO John Cinelli will retain a minority position after the deal closes.

　　T-Mobile said it plans to invest nearly $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.

　　After the close of the deal, Metronet, based in Evansville, Indiana, will transition to a wholesale service provider for its retail customers. T-Mobile will take on management of residential customer acquisition and support, using T-Mobile's marketing and service model and Metronet's fiber broadband services.

　　"Metronet will focus on build plans, network engineering and design, network deployment, and customer installation," states a press release from T-Mobile. "Following the transaction close, Metronet is expected to be self-funding on a go forward basis and it is expected to reach 6.5 million homes passed by the end of 2030."

　　T-Mobile said the JV will complement its existing fiber partnerships plus T-Mobile's 5G Home Internet offering, a fixed wireless service supporting 5 million households and businesses in the US. The 5G Home Internet service delivers fallow network capacity via T-Mobile's 5G network.

　　T-Mobile doesn't plan on providing any additional capital contributions to the JV to achieve this goal.

　　Fiber footprint growth

　　Light Reading reported on T-Mobile and KKR's initial plans for the JV earlier this month, and explained that the 50/50 structure would be similar to T-Mobile's transaction with EQT for Lumos, a fiber operator focused on the mid-Atlantic region with expansion ambitions.

　　The JV "would be the largest fiber deal that T-Mobile has entered into so far," New Street Research analyst Vikash Harlalka predicted in a research note distributed via email. The Metronet deal could provide T-Mobile with access to nearly 1.5% of US households. Harlalka estimated that Metronet adds about 500,000 locations annually.

　　"In recent months, Metronet has announced a $21 million investment to bring fiber to three communities in Minnesota (Chanhassen, Shorewood and Victoria), and another $2.3 million for an expansion into Belle Plaine, Minnesota," reported Light Reading.

　　In a statement, Mike Sievert, CEO of T-Mobile, said the JV presents a unique opportunity to expand T-Mobile's broadband business and complements the company's wireless growth strategy. He added that Metronet's "fast build pace" and management team will be an asset.

　　"Together with KKR's strong heritage of corporate partnership and global fiber franchise, we will further expand the Un-carrier's fiber footprint and deliver real value and choice to customers while addressing a growing demand for fast and reliable broadband," said Sievert.

　　Waldemar Szlezak, partner, and global head of digital infrastructure at KKR, said KKR brings to the table a "strong track record of building fiber networks in multiple countries around the world." KKR has invested in Metronet since 2021 and has witnessed the company deploy new fiber infrastructure and add subscribers in underserved areas, added Szlezak.

　　KKR's investment in Metronet is part of its global infrastructure strategy, launched in 2008, that manages over $61 billion in infrastructure assets. KKR has invested in FTTH providers globally with over 25 million homes passed and building more than 4 million annually.

　　KKR's infrastructure investments include the creation of independent open access wholesale fiber optic network companies in Chile, Colombia, Peru and in the Netherlands, and investments in Hyperoptic in the UK, Telenor Fiber in Norway and Deutsche Glasfaser in Germany. KKR recently closed its acquisition of Telecom Italia Netco, which owns and operates the entire national copper and fiber fixed line network in Italy.

　　The deal is expected to close in 2025, subject to customary closing conditions and regulatory approvals.