AT&T CFO says BlackRock JV offers cost-effective strategy for out-of-footprint fiber

AT&T entered the new year with a laser focus on fiber, unveiling over the holidays its new joint venture (JV) with BlackRock Alternatives. The operator hasn’t revealed much about where the JV – called Gigapower – plans to build out its wholesale fiber network. But the crux of the deal, according to AT&T CFO Pascal Desroches, is that it allows AT&T to expand outside of its fiber footprint in a cost-effective way.

Speaking at Citi’s Communications, Media & Entertainment conference, Desroches said the JV offers a “capital-light way” for AT&T to experiment outside its traditional ILEC footprint. From there, AT&T can determine “whether the economics make sense” to further expand in those out-of-footprint areas.

As for where the operator's current deployment rates stand, Desroches boasted AT&T is building out fiber “at rates no one has ever done in the industry.” The operator has previously stated plans to reach over 30 million homes and business with fiber by end of 2025. Gigapower is targeting an initial 1.5 million customer locations with its multi-gig fiber network.

While AT&T has been tapping into federal subsidies to bolster its fiber builds, Desroches stressed the company is also “deploying a lot” of its own capital in the process. At the same time, AT&T wants to continue investing in its wireless network – a crucial complement to the fiber business.

“Given the amount of investment dollars going after [fiber], our goal was ‘let’s see if we can go faster without sacrificing our deleveraging goals,” Desroches said. He noted that if AT&T can make “attractive returns” on the JV, “there’s no reason why we should stop at a million and a half [locations].”

As previously mentioned, AT&T has yet to disclose where exactly Gigapower plans to build out fiber, but an operator rep recently told Fierce the JV is “expected to help AT&T bring fiber service to the Mesa, Arizona area,” a market where AT&T is particularly honing its out-of-footprint fiber strategy.

Desroches declined to comment on whether the JV could include potential fiber acquisitions. He emphasized Gigapower’s goal is to build in regions that are “economically really attractive” or areas that “may potentially be under-penetrated in wireless.”

“We will look for opportunities whether it’s through government stimulus money [or partnerships] to see if we can go faster, but it cannot and will not be at the expense of strengthening the balance sheet,” he reiterated.