T-Mobile & EQT Joint Venture (JV) to acquire Lumos and build out T-Mobile Fiber footprint
T-Mobile and EQT, a purpose-driven global investment organization, today announced they have entered into a joint venture (JV) with EQT’s Infrastructure VI fund (EQT) that will acquire fiber-to-the-home platform Lumos from EQT’s predecessor fund EQT Infrastructure III.
The JV will bring T-Mobile’s retail, marketing, brand and customer experience strengths together with EQT’s fiber infrastructure investment expertise. Together they will acquire Lumos’ scalable fiber network build capabilities to deliver best-in-class high-speed fiber internet connectivity to customers across the U.S. without access to fiber today. After the transaction closes, Lumos, which currently reaches 320,000 households over 7,500 route miles with fiber optic internet and home wi-fi service in the Mid-Atlantic, will transition to a wholesale model with T-Mobile as the anchor tenant owning customer relationships and leveraging its brand to attract new subscribers. The JV will focus on market identification and selection, network engineering and design, network deployment, and customer installation.
“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,” said Mike Sievert, CEO of T-Mobile. “Together 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. Customers – homes and businesses – who get the fast, affordable, and reliable internet they need will be the real winners,” he added.
T-Mobile provides a unique value proposition and much-needed reliable connectivity to homes and businesses across the country through its 5G Internet, a fixed wireless internet service on its 5G network that is available to more than 50 million households and businesses nationwide and serves over 5 million customers, as well as T-Mobile Fiber, which has launched in parts of 16 U.S. markets. Those launches have shown consumer demand for broadband that T-Mobile cannot meet through its fallow capacity fixed wireless product alone, and many customers want the speed and reliability that only fiber can provide.
Jan Vesely, Partner within EQT’s Infrastructure Advisory Team said, “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.”
“Lumos takes great pride in our achievements, as we have successfully delivered fiber to hundreds of thousands of homes and businesses, marking a significant acceleration in our growth. Our commitment to enhancing customers’ lives through the development of a network prepared for the demands of tomorrow remains steadfast,” Brian Stading, CEO of Lumos. “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.”
The transaction is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals. At closing, T-Mobile is expected to invest approximately $950 million in the JV to acquire a 50% equity stake and all existing fiber customers, with the funds invested by T-Mobile being used by Lumos for future fiber builds. The next capital contribution by T-Mobile out of an additional commitment of approximately $500 million is anticipated between 2027 and 2028. These combined investments are expected to allow Lumos to reach 3.5 million homes passed by the end of 2028. T-Mobile continues to expect to complete its remaining authorization for share repurchases and dividends in 2024.
With this transaction, EQT Infrastructure VI is expected to be 35-40% percent 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.
References:
https://www.t-mobile.com/news/business/t-mobile-eqt-jv-to-acquire-lumos
T-Mobile US reported postpaid phone net customer additions of more than half a million in the quarter and added more than 400,000 high-speed internet customers, while striking a deal with private equity firm EQT to get into the fiber game.
The company increased its full-year guidance based on its Q1 performance.
T-Mobile US reported strong customer numbers that nonetheless weren’t quite as blockbuster as its performance in the year-ago period. Postpaid net customer additions were 1.2 million (down 73,000 from a year ago), postpaid phone net adds of 532,000 (down 6,000 YoY) and postpaid net account additions of 218,000 (down 69,000). The carrier also noted that its postpaid phone churn was 0.86% and matches a record low churn rate for the first quarter. The company continued to rack up high-speed internet customers as well, gaining 405,000 net new adds compared to more than 510,000 in the first quarter of last year.
Service revenues were up 4% year-on-year to $16.1 billion, with postpaid service revenues rising 6% to $12.6 billion. Company profits for the first quarter rose 22% YoY to $2.4 billion.
The carrier reported that nearly 95% of its 5G traffic is carried on midband spectrum and 85% of its 5G traffic comes via sites with three spectrum bands (600 MHz, 1.9 GHz, and 2.5 GHz), which the company said contributes to an “incredibly consistent network experience.”
“T-Mobile’s 5G leadership has translated into overall network leadership, while 5G is increasingly becoming the overall network experience for customers,” the carrier said in a release.
“The network is an increasingly powerful part of our customers loyalty, as three-quarters of our postpaid phone customers already have a 5G smartphone and they’re having a differentiated experience on the T-Mobile network,” President and CEO Mike Sievert said on the company’s quarterly call with investors.
https://www.rcrwireless.com/20240426/carriers/t-mobile-kicks-off-2024-with-strong-numbers-and-a-fiber-jv