T-Mobile is raising its fledgling fiber broadband ambitions to a new level. Through a joint venture with EQT, the wireless operator is acquiring Lumos Networks for $1 billion to bring services to 2 million homes in underserved markets by 2026.
The JV will combine T-Mobile’s retail, marketing, brand, and customer experience strengths with EQT’s fiber infrastructure investment expertise.
After the transaction closes, Lumos, which currently reaches 320,000 households over 7,500 route miles with fiber-based internet and home wi-fi service in the Mid-Atlantic, will transition to a wholesale model with T-Mobile as the anchor tenant owning customer relationships and leveraging its brand to attract new subscribers. The JV will focus on market identification and selection, network engineering and design, network deployment, and customer installation.
“As the demand for reliable, low-latency connectivity rapidly increases, this deal is a scalable strategy for T-Mobile to take a significant step forward in expanding on our broadband success and continue shaking up competition in this space to bring even more value and choice to consumers,” said Mike Sievert, CEO of T-Mobile. “Together with EQT and Lumos, T-Mobile is building on our position as the fastest growing broadband provider in the country in a value-accretive way that complements our sustained growth leadership in wireless.”
Meeting fiber desires
The idea of T-Mobile purchasing a fiber provider to enhance its service stance, while new, is not all that surprising.
T-Mobile has become known for its alternative marketing methods, including its un-carrier marketing campaign, which offers new customers a streamlined plan structure that eliminates contracts, subsidized phones, data coverage fees, and early termination fees.
Germany’s Handelsblatt revealed in a report T-Mobile’s desire to build a fiber broadband network emerged in mid-March. The German news outlet cited several sources and reported that the wireless operator planned to enter a joint venture with Lumos Networks.
Before this, T-Mobile had developed its own T-Mobile Fiber division that delivered fiber-based broadband service to select locations using other fiber provider networks. The provider offered three fiber broadband tiers: 500 Mbps, 1 Gbps, and 2 Gbps, with prices ranging from $55 to $110 monthly.
T-Mobile Fiber has been launched in parts of 16 U.S. markets. According to T-Mobile, the fiber “launches have shown consumer demand for broadband that T-Mobile cannot meet through its fallow capacity fixed wireless product alone, and many customers want the speed and reliability that only fiber can provide.”
Fiber expansion ahead
T-Mobile expects to complete the acquisition either late this year or early in 2025 after meeting customary closing conditions and regulatory approvals.
At closing, T-Mobile is expected to invest approximately $950 million in the JV to acquire a 50% equity stake and all existing fiber customers. The funds invested by T-Mobile will be used by Lumos for future fiber builds.
With this transaction, EQT Infrastructure VI is expected to be 35-40% percent invested (including closed and signed investments, announced public offers, if applicable, and less any expected syndication) based on target fund size and subject to customary regulatory approvals.
A big focus in the future is to enhance the reach of the Lumos fiber network.
T-Mobile plans to contribute an additional $500 million in capital between 2027 and 2028. These combined investments will allow Lumos to reach 3.5 million homes by the end of 2028. T-Mobile expects to complete its remaining authorization for share repurchases and dividends in 2024.
“With the support of our private equity partner, EQT, and leveraging the strength of the T-Mobile brand and unrivaled customer experience, Lumos is set to expedite our network expansion,” said Brian Stading, CEO of Lumos.
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