BlackRock Funnels Capital into Fiber by Forming JV with AT&T

Posted on 12/23/2022

Dallas, Texas-based AT&T Inc. (NYSE:T) and BlackRock Alternatives (a unit of BlackRock Inc.), through a fund managed by its Diversified Infrastructure business, have signed a definitive agreement to form a joint venture that will operate a commercial fiber platform. The newly formed joint venture is called Gigapower, LLC. Gigapower expects to provide a fiber network to internet service providers (ISPs) and other businesses across the United States. Gigapower will serve customers outside of AT&T’s traditional 21-state wireline service footprint with fiber access technologies in innovative and efficient ways. And AT&T will leverage its nationwide wireless sales capabilities to sell fiber to customers in Gigapower territories.

Gigapower plans to deploy a multi-gig fiber network to an initial 1.5 million customer locations across the nation using a commercial open access platform. The Gigapower fiber deployment will be incremental to AT&T’s existing target of 30 million-plus fiber locations, including business locations, by the end of 2025.

Following close, AT&T and BlackRock will jointly own and govern Gigapower. AT&T does not expect to consolidate Gigapower’s financial results but does expect to report its consumer subscribers served through Gigapower in Consumer Wireline business unit operational results. Any impacts to AT&T’s 2023 capital investment or free cash flow forecast will be included in AT&T’s 2023 financial guidance when it announces fourth-quarter 2022 results in January 2023.

This transaction is subject to customary closing conditions, including regulatory approvals.

AT&T is saddled with debt and has a massive US$ 123.8 billion in long-term debt. AT&T had binged on buying DirecTV and Time Warner to build pay television and streaming businesses. Now AT&T, is trying to find financial partners like BlackRock (ultimately asset owners in funds such as pensions and sovereign wealth funds) as a form of cheaper financing. Global asset owners are keen on owning more U.S. telecommunications infrastructure.

Get News, People, and Transactions, Delivered to Your Inbox