- AT&T plans to double its fiber footprint with $5.75B Lumen deal
- The sale notably excludes Lumen’s copper assets, which is all the better for AT&T
- The operator will use the acquisition to launch another, Gigapower-style JV
The news is out that Lumen is selling its consumer fiber biz to AT&T. As far as analysts are concerned, AT&T couldn’t have asked for a better deal to facilitate its fiber ambitions.
“This is a fantastic transaction for AT&T,” said New Street Research’s Jonathan Chaplin in a note to investors. “They are getting the most valuable ILEC markets not owned by AT&T and Verizon.”
With the Lumen assets, AT&T expects to reach about 60 million total fiber locations by the end of 2030. This would effectively double AT&T’s current fiber footprint, CFO Pascal Desroches noted, particularly in states like Colorado, Idaho, Iowa, Nebraska, Oregon, Utah and Washington.
The Mass Markets deal consists of approximately 1 million subscribers and 4 million fiber passings but notably excludes Lumen’s copper-based customers along with the associated central offices (COs).
'Copper is cooties'
No copper is all the better for AT&T, Recon Analytics Principal Roger Entner told Fierce. “Copper is cooties: Nobody wants it and it’s hard to get rid of."
AT&T is already planning to shut down most of its copper network by the end of 2029. To that end, the operator earlier this year inked a deal to sell some of its copper COs to real estate developer Reign Capital.
“AT&T got a terrific deal here and T-Mobile will have to consider this deal to be ‘the one that got away,’” Entner said.
He noted T-Mobile (which is building up a hefty fiber arsenal of its own) was the other likely buyer of the Lumen assets.
Lumen, in addition to keeping the copper assets and its enterprise fiber customers, will retain ownership of all the metro fiber backbone and the associated real estate.
What this means for AT&T is it will receive “long-term access” to certain Lumen COs, poles and conduits, AT&T said in a press release. Lumen also agreed to provide AT&T services for some field operations, deployment, billing, customer support and more via “multiple transitional agreements.”
These agreements are expected to last about two years after the transaction closes, which is set to happen in the first half of 2026.
AT&T plots another fiber JV
AT&T isn’t just planning to take the Lumen asset as is. The operator will create a new, fully-owned subsidiary, dubbed “NetworkCo,” and partially sell it off to a private equity partner.
NetworkCo will “operate as a wholesale commercial open access platform, providing fiber access services to AT&T as the anchor tenant,” said AT&T.
Sound familiar? It’s a lot like AT&T’s Gigapower joint venture with BlackRock. Launched in 2023, Gigapower is a wholesale fiber network that’s targeting more than 5 million locations outside of AT&T’s traditional wireline footprint.
According to Wolfe Research analysts, AT&T’s new JV move allows the operator to gain immediate access in major markets like Denver, Las Vegas, Minneapolis, Orlando, Phoenix, Salt Lake and Seattle.
AT&T in those markets currently “under indexes in current fiber presence - and in some cases under serves mobility,” the analysts wrote.
U.S. fiber JVs keep on stacking up. Apart from AT&T, T-Mobile recently closed its JV with EQT to acquire Lumos and it has another pending JV with KKR, where the two will own regional provider Metronet. Bell Canada, which is buying Ziply for $5.1 billion, is forming a JV with a Canadian PE firm to help expand Ziply’s footprint.