After a small scale launch into fibre last year in New York, it’s now looking for partner
Deutsche Telekom’s American subsidiary, T-Mobile US, is considering going into the fibre infrastructure business, according to a report from Bloomberg. Apparently it is mulling a joint venture or entering into a commercial partnership.
Its two rivals, AT&T and Verizon both have considerable fibre infrastructure, providing FTTP as well as backhaul for their own mobile networks, which makes solid economic sense.
Fixed wireless success
So far, T-Mobile has been renting fixed infrastructure for backhaul – after acquiring Sprint in XXX, the licensed spectrum it gained enabled T-Mobile to offer mobile broadband via fixed wireless networks (FWA) to people’s homes – known as 5G Home Internet – including in underserved rural areas.
This has proved a successful strategy, with T-Mobile adding another 578,000 subscribers in Q3 and now has more than 2.1 million in total. The operator says it is on track to have between 7 million and 8 million FWA subscribers by the end of 2025.
The rub is that FWA customers use up to 40 times more data than mobile subscribers, but pay proportionately less per bit – hence it might make more sense to build your own backhaul, which also gives you lots of other options – offering fibre to customers or wholesaling capacity – rather than paying rent.
Also, the US government is offering billions of dollars in subsidies to build out fibre in the wake of the pandemic: the Bipartisan Infrastructure Law includes a budget of $65 billion for fast broadband.
AT&T has already engaged Morgan Stanley to help it find a suitable partner for a possible $10-15 billion joint venture to build out more fibre. Now it seems T-Mobile US is prepared to invest up to $4 billion in joint venture or other kind of commercial partnership and has enlisted Citigroup’s help in its endeavours.
New York, New York
In August 2021, T-Mobile experiment in the fixed market, launching T-Mobile Fiber, a broadband service that can perform at speed up to a 1Gbps, in Manhattan, in New York City running on Pilot Fiber’s optical network and available to about 700 premises.
On the recent earnings call, CEO Mike Sievert reportedly replied to a question on fibre plans: “We have some partnerships that we’re pursuing, now called T-Fiber, at a very small scale, so we can make sure that we’re learning”. It would seem to be a fast learner.