AT&T, BlackRock to Form Wholesale Fiber Provider Venture

AT&T has made its first move to extend its fiber presence outside of its traditional territory by establishing partnership with BlackRock Alternatives (BlackRock), through a fund managed by its Diversified Infrastructure business. It signed an agreement to form a joint venture that will operate a commercial fiber platform.

According to AT&T, the newly formed joint venture — Gigapower, LLC — expects to provide a fiber network to internet service providers (ISPs) and other businesses across the United States. 

AT&T and BlackRock hailed the new venture to extend its services to more customers with broadband.  

“Now more than ever, people are recognizing that connecting changes everything” said John Stankey, CEO of AT&T, in a release. “With this joint venture, more customers and communities outside our traditional service areas will receive the social and economic benefits of the world’s most durable and capable technology to access all the internet has to offer.”

Mark Florian, Global Head of Diversified Infrastructure, BlackRock, noted that AT&T would serve as both a joint owner and the first wholesale tenant.

“We believe Gigapower’s fiber infrastructure designed as a commercial open access platform will more efficiently connect communities across the United States with critical broadband services,” he said. “We look forward to partnering with Gigapower’s highly experienced management team to support the company’s fiber deployment plans and shared infrastructure business model.”

Leveraging, Extending Sales Channels

Gigapower will serve customers outside of AT&T’s traditional 21-state wireline service footprint with fiber access technologies in innovative and efficient ways.

And AT&T will leverage its nationwide wireless sales capabilities to sell fiber to customers in Gigapower territories.

Philip Burnett, an analyst at New Street Research, said in a research brief that while AT&T plans to leverage its wireless sales channels to sell fiber in the Gigapower footprint, he suspects “this is only part of the story (For example, T-Mobile is wholesaling someone else’s fiber in NYC, and seems open to doing more of it).”

A Complementary Build

AT&T is structuring the new fiber joint venture complementary to its fiber build-out plans.

Gigapower plans to deploy a multi-gig fiber network to an initial 1.5 million customer locations, serving as a joint owner and using a commercial open-access platform. The Gigapower fiber deployment will be incremental to AT&T’s target of 30 million-plus fiber locations, including business locations, by the end of 2025. Combined with existing efforts within AT&T’s 21-state footprint, this network deployment will advance efforts to bridge the digital divide, ultimately helping to provide the fast and highly secure internet people need. This network expansion will also help spur local economies in the communities in which Gigapower operates.

Bill Hogg, CEO of Gigapower, said in a release that it intends to bring fiber-based broadband into areas that don’t have access to such service today. “Our goal is to help local service providers provide fiber connectivity, create the communications infrastructure needed to power the next generation of services, and bring multi-gig capabilities to help close the gap for those without multi-gig service,” he said.                  

Following the close, AT&T and BlackRock will jointly own and govern Gigapower. AT&T does not expect to consolidate Gigapower’s financial results but does expect to report its consumer subscribers served through Gigapower in Consumer Wireline business unit operational results. Any impacts to AT&T’s 2023 capital investment or free cash flow forecast will be included in AT&T’s 2023 financial guidance when it announces fourth-quarter 2022 results in January 2023.

This transaction is subject to customary closing conditions, including regulatory approvals. Additional terms were not disclosed. 

Burnett, whose firm previously wrote about the rumors of this new wholesale venture, said it “would view the venture as a modest positive for AT&T.”

“The impact on Cable is likely negligible,” he said. “The impact for other telcos is likely to be small, though this will depend on where exactly AT&T and Blackrock plan to build (though the press release mentions the Digital Divide, it doesn’t specify that they plan to build only in unserved areas).”