Assuming the transaction clears all the necessary hurdles, the operator expects to invest $1.45bn in deploying fibre infrastructure by 2028 via the JV
T-Mobile US and investment house EQT have entered into a joint venture with EQT’s Infrastructure VI fund (EQT). The JV will acquire FTTH platform Lumos from EQT’s predecessor fund, EQT Infrastructure III.
Lumos’ infrastructure reaches 320,000 households having deployed some 7,500 miles of fibre and home Wi-Fi service in the Mid-Atlantic. After the transaction is completed, it will adopt a wholesale model with T-Mobile as the anchor tenant.
T-Mobile is Deutsche Telekom’s US subsidiary, which helped propel the former German incumbent to a market capitalisation above €100 billion in January 2023. It is the first European operator group to breach that threshold.
Once complete
At closing, T-Mobile is expected to invest about $950 million (€886.4 million) in the JV to acquire a 50% equity stake and all existing fibre customers. The funds invested by T-Mobile will be used by Lumos for future fibre builds.
The next capital contribution by T-Mobile out of an additional commitment of about $500 million is expected between 2027 and 2028. The JV will focus on identifying and choosing markets, network engineering and design, network deployment and installations for customers.
The combined investments should allow Lumos to pass 3.5 million homes by the end of 2028.
The transaction is expected to close in late this year or early next, subject to customary closing conditions and regulatory approvals.
Current customer base
T-Mobile provides connectivity to homes and businesses across through fixed wireless access on its 5G network. The service is available to more than 50 million households and businesses nationwide and serves over 5 million customers.
It also operates T-Mobile Fiber which has begun deployment in parts of 16 US markets. This has revealed the demand for the reliability and speed of fibre-based broadband.
With this transaction, EQT Infrastructure VI is expected to be 35-40% invested (including closed and/or signed investments, announced public offers, if applicable, and less any expected syndication) based on target fund size and subject to customary regulatory approvals.
High demand for fibre
Mike Sievert, CEO of T-Mobile said in a written statement, “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.
“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.”
New phase
Jan Vesely, Partner within EQT’s Infrastructure Advisory Team commented, “We are proud to have partnered with Lumos over the past six years to rapidly scale the company and roll out fiber to underserved markets, and we look forward to continuing to leverage EQT’s considerable digital infrastructure and fiber expertise to support the significant fiber buildout ambitions of T-Mobile and the JV.
“This new effort will build critical fiber broadband infrastructure that will enable remote work, education, and healthcare use cases across the country. We have worked with T-Mobile as a customer across many of our existing digital infrastructure investments and are delighted to build on that relationship and partner with T-Mobile on this opportunity to roll out fiber to underserved Americans.”
Brian Stading, CEO of Lumos, added, “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. This joint venture will amplify our ability to change lives through the transformative power of fiber optic internet.”