T-Mobile makes another fiber growth play with U.S. Internet deal

• T-Mobile pursues more pure play fiber assets with its U.S. Internet acquisition

• But the deal isn’t enough to give T-Mo an edge over its competition, said New Street Research

• The operator is also doubling down on fiber through BEAD

  
  

T-Mobile is acquiring Minnesota-based ISP U.S. Internet, marking another notch on its fiber broadband toolbelt.

Unlike T-Mobile’s acquisitions of Lumos and Metronet – both of which are officially closed – the U.S. Internet buy has an under-radar-vibe. T-Mobile hasn’t published a press release on the deal, but reports said U.S. Internet customers received a letter earlier this month stating they’ll “become a T-Mobile customer on or after September 2.”

Financial terms of the deal are unknown, and Fierce has reached out to T-Mobile for more information. But the operator has previously indicated more M&A moves are on the horizon.

“We like pure play fiber assets,” said T-Mobile COO Srini Gopalan on the company’s Q2 earnings call, noting the carrier is “very open” to fiber investments.

T-Mobile’s fiber game plan

U.S. Internet seems to fit the pure play bill. The ISP started out as a Wi-Fi provider for the city of Minneapolis but has offered fiber internet since 2010. Minnesota is also one of several states where T-Mobile is expanding its fiber network through open access partnerships. For instance, it’s working with Intrepid in Colorado and Minnesota, Si-Fi Networks in California and Tillman in Florida.

T-Mobile as of June has fiber available to more than 500,000 households across 10 states, and it is aiming to reach 12-15 million fiber locations in the coming years with the help of Lumos, Metronet and open access deals.

The U.S. Internet transaction would see T-Mobile gain over 192,000 fiber locations, according to New Street Research. But it’s not enough to give the operator an edge over AT&T and Verizon, which both have larger and more established fiber footprints.

Furthermore, most of U.S. Internet’s footprint overlaps with at least one other cable or fiber provider. Harlalka noted 96% of the ISP’s locations overlap with Comcast and 71% overlap with Lumen’s home fiber territory (soon to be acquired by AT&T).

Competition is running rampant, but T-Mobile’s fiber train keeps chugging along through acquisitions as well as federal funding. T-Mobile, along with Louisiana-based fiber companies Swyft Fiber and REV, is part of a consortium that scored $378 million from the state’s new BEAD awards. The funds aim to cover over 68,000 of roughly 128,000 underserved Louisiana locations.

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