T-Mobile US (NASDAQ: TMUS) is exploring options to create a fiber-optic network, either through a joint venture or a commercial partnership, according to sources familiar with the discussions.
The company is working with Citigroup to find partners to build a fiber network targeting the home-broadband market that will require several billion dollars of investment, said the sources. The joint-venture could be worth $4 billion and T-Mobile could chip in on a part of that, reports Bloomberg.
Terms aren’t finalized and could still change. The discussions with potential joint venture investors are preliminary and it’s possible no transaction will be reached. Representatives for T-Mobile and Citigroup declined comment.
The significant fiber investment would break new ground for T-Mobile, according to Bloomberg. Unlike wireless peers AT&T Inc. and Verizon Communications Inc., T-Mobile doesn’t own a fiber network and instead leases capacity for its mobile-phone network.
T-Mobile started a fiber-to-the-home pilot program in parts of New York City last year. The company also has been exploring partnerships with other fiber-to-the-home providers including cable and other phone companies, the sources said.
The company sells a fixed wireless access home internet service that beams signals to WiFi routers. The service has attracted broadband customers from cable companies, but has bandwidth limitations that fiber networks do not, notes Bloomberg. With its own fiber network, T-Mobile would have the option to connect homes and businesses with high-speed fiber service in select areas, in lieu of FWA.
T-Mobile’s potential fiber partnership is similar to an effort by AT&T, which is working with Morgan Stanley to help launch a $10 billion to $15 billion fiber expansion with an infrastructure finance partner.