Does a communications service provider need to own its own fiber infrastructure to expand outside of its established operating area? AT&T (NYSE: T) doesn’t think so. On Monday, the company announced four new agreements with commercial open-access fiber providers: Boldyn Networks, Digital Infrastructure Group, PRIME FiBER and Ubiquity. These agreements provide AT&T with wholesale access to fiber broadband networks in geographies not served by either AT&T’s 21-state in-region network or Gigapower, its out-of-region joint venture with BlackRock (NYSE: BLK). This approach enables the company to offer both AT&T Fiber and 5G wireless services to more customers.
At the end of 2Q24, AT&T reported more than 8.8 million AT&T Fiber customers on its in-region fiber network that passes over 28 million total consumer and business locations. Though still scaling, AT&T Fiber performance in Gigapower geographies is achieving penetration rates ahead of plan. AT&T says it is seeing greater adoption of 1+ Gbps speed tiers as compared to the company’s in-footprint fiber subscribers with more customers taking converged fiber/wireless offers. The company expects that Gigapower will exit 2024 on an accelerated buildout trajectory. As a result, AT&T and BlackRock plan to expand Gigapower’s fiber footprint, both in its existing and new geographies, beyond the initial 1.5 million locations announced in December 2022.
AT&T says it wants to expand organically where it offers fiber in both existing markets and new service areas. This approach is different from that taken by T-Mobile (NASDAQ: TMUS) which invested in fiber overbuilders, Metronet and Lumos, or Verizon (NYSE: VZ) which is acquiring Frontier Communications, Inside Towers reported.
Rather, AT&T is pursuing various economically attractive models that complement its primary focus of growing its organic in-region fiber network. These other models include its Gigapower JV, the four new commercial open-access agreements, a fund managed by its Diversified Infrastructure business, and public-private partnerships supported by federal infrastructure funding through programs like BEAD.
John Stankey, AT&T CEO comments, “With our organic fiber build, we’re seeing improving returns as we expand our network. In new service areas, Gigapower is ramping well, and we’re targeting additional geographies for growth with the joint venture and other commercial open-access agreements.”
AT&T continues to organically build fiber at scale in-region and says it is on track to pass over 30 million consumer and business locations by the end of 2025. The better-than-expected returns the company is seeing on its fiber investment potentially expands the opportunity to go beyond this target by roughly 10 million to 15 million additional in-footprint locations passed. This also assumes similar fiber build parameters and a favorable regulatory environment for building infrastructure, according to the company.
By John Celentano, Inside Towers Business Editor
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