AT&T, BlackRock joint venture builds a wholesale fiber network

AT&T has formed a joint venture with the private equity company BlackRock Alternatives to provide a wholesale fiber network across the U.S.

The joint venture, named Gigapower, will provide fiber infrastructure designed as a commercial open-access platform. It will lease the network to internet service providers and other businesses outside of AT&T’s traditional 21-state wireline footprint.

Gigapower plans to deploy the multi-gig fiber network to an initial 1.5 million customer locations. The Gigapower fiber deployment will be incremental to AT&T’s existing target of 30-million-plus fiber locations, including business locations, by the end of 2025.

AT&T will leverage its nationwide wireless sales capabilities to sell fiber to customers in Gigapower territories.
“With this joint venture, more customers and communities outside of 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,” said John Stankey, CEO of AT&T, in a statement.
AT&T will be the first wholesale tenant of the network. 

Mark Florian, global head of Diversified Infrastructure at BlackRock, stated, “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.”
Bill Hogg, CEO of Gigapower, said, “We have a proven team of professionals building this scalable, commercial open-access wireline fiber network. Our goal is to help local service providers provide fiber connectivity.”
Following the close of the transaction, AT&T and BlackRock will jointly own and govern Gigapower. 

AT&T plans to report its consumer subscribers served through Gigapower in its Consumer Wireline business unit operational results.

New Street Research analyst Philip Burnett wrote, “We would view the venture as a modest positive for AT&T. The impact on Cable is likely to be negligible. The impact for other telcos is likely to be small, though this will depend on where exactly AT&T and Blackrock plan to build.”

Sean McDevitt, a partner at the telecom consulting firm Arthur D. Little, said, “While many worry about a fiber glut, overbuilding and stranded costs leading to poor returns to investors, we see little evidence of fiber overbuilders overbuilding each other, although this remains to be seen. This initiative, however, given its open-access nature, will provide an alternative model for fiber competition by establishing a large-scale wholesale platform.”