AT&T Inc. and a unit of BlackRock Inc. agreed to form a joint venture that provides internet services to customers outside of AT&T’s traditional 21-state local phone territory.
(Bloomberg) — AT&T Inc. and a unit of BlackRock Inc. agreed to form a joint venture that provides internet services to customers outside of AT&T’s traditional 21-state local phone territory.
The new venture, called Gigapower LLC, aims to provide a best-in-class fiber network to internet service providers and other businesses across the US, the companies said Friday in a statement. They are targeting 1.5 million customer locations initially.
AT&T had for months been looking for an infrastructure partner that could help invest billions of dollars in fiber-optic network expansion. The company is embarking on its biggest plan yet to pursue broadband customers outside of its local phone territory.
The joint venture is subject to regulatory approval and other closing conditions. Financial details weren’t disclosed.
AT&T shares were little changed at 9:44 a.m. Friday. The stock is down about 2% this year.
The rise of digital infrastructure investing has been swift in recent years, with alternative asset managers such as Brookfield Asset Management, KKR & Co. and Blackstone Inc. jockeying for assets.
AT&T Chief Executive Officer John Stankey is bullish on fiber as a path to long-term growth since it provides some of the largest capacity and highest potential speed of any broadband connection. That gives fiber-optic lines a longer-term viability than copper wire or wireless connections. But the wiring costs are high and require a huge investment in labor and equipment.
The company is targeting areas where it will be the first fiber to the home provider. Broadband providers are eyeing $100 billion in federal funds earmarked to connect homes to the internet in areas that have been underserved or difficult to reach.
As AT&T focuses on fiber, peers Verizon Communications Inc. and T-Mobile US Inc. have been selling wireless home internet as a cheaper alternative to fiber.
–With assistance from Scott Moritz.
(Updates shares and adds federal funds in eighth paragraph.)
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