Bellevue-based T-Mobile, the nation’s second-largest wireless carrier, is exploring options to create a fiber-optic network, either through a joint venture or a commercial partnership, according to people familiar with the matter.
The company is working with Citigroup to find partners to build a fiber network targeting the home-broadband market that will require several billion dollars of investment, said the people, who asked not to be identified because the matter is private. One of the people said the joint venture could be worth $4 billion and T-Mobile could chip in on a part of that.
Terms aren’t finalized and could still change. The discussions with potential joint venture investors are preliminary and it’s possible no transaction will be reached. Representatives for T-Mobile and Citigroup declined to comment.
The significant landline investment would break new ground for T-Mobile, which, unlike wireless peers AT&T and Verizon, doesn’t own a fiber network and instead leases capacity for its mobile-phone network.
While expensive to build, fiber networks offer an abundance of bandwidth that could open up new rounds of revenue growth for service providers.
T-Mobile as well as numerous other telecommunications companies and infrastructure firms are eyeing the nearly $100 billion pool of federal money created to fund US broadband build out.
T-Mobile started a fiber-to-the-home pilot program in parts of New York City last year. The company also has been exploring partnerships with other fiber-to-the-home providers including cable and other phone companies, the people said.
The company sells a wireless home internet service that beams signals to Wi-Fi routers. The service has attracted broadband customers from cable companies, but has bandwidth limitations that fiber networks don’t. With its own fiber network, T-Mobile would have the option to connect homes and businesses with high-speed fiber service and also reduce leasing costs for connections to cell sites.
T-Mobile’s potential fiber partnership is similar to an effort by AT&T, which is working with Morgan Stanley to help launch a $10 billion to $15 billion fiber expansion JV with an infrastructure finance partner.