T-Mobile has agreed to set up a joint venture (JV) with investment firm KKR to acquire fiber Internet service provider Metronet.
The agreement will see the JV scoop up Metronet's broadband infrastructure, its fiber business operations, and existing customers.
Announced today, the transaction will also see the JV acquire Oak Hill Capital’s existing stake.
Oak Hill Capital will re-invest to retain a minority position and founder John Cinelli will also retain a minority position once the deal closes, confirmed the companies in a joint announcement.
In a 8-K filing, T-Mobile said it expects to invest approximately $4.9 billion to acquire a 50 percent equity stake in the JV at the closing and, pursuant to the Asset Purchase Agreement, 100 percent of Metronet’s residential fiber retail operations and customers, as well as funding of the JV.
The transaction is expected to close in 2025, subject to customary closing conditions and regulatory approvals.
“This is a unique opportunity and a smart, capital-efficient deal that enables T-Mobile to profitably build on our success in broadband and provide fast, affordable, and reliable connectivity options to millions more customers nationwide as a complement to our wireless growth strategy,” said Mike Sievert, CEO of T-Mobile.
“Metronet is the perfect partner for T-Mobile as a leader in fiber solutions with an incredibly fast build pace, and a top-notch management team."
Indiana-based Metronet has reached more than two million homes and businesses across 17 states with its fiber solutions. By 2030, the ISP is aiming to reach 6.5 million.
T-Mobile noted that the JV would "complement" its existing 5G Home Internet offering, a fixed wireless solution currently being used in more than five million households and businesses nationwide.
It also referred to its fiber push in recent months, which has seen the company acquire Lumos Networks as part of another JV with EQT Infrastructure.
At the time of that announcement, T-Mobile said it plans to invest $950 million in the JV to acquire a 50 percent equity stake and all existing fiber customers, with the funds invested by T-Mobile being used by Lumos for future fiber builds. A further $500 million will be invested by T-Mobile between 2027 and 2028, the company added.
The funds should enable Lumos to extend its fiber offering to 3.5 million homes by the end of 2028.
At present, T-Mobile currently offers fiber services across 13 states, as per its T-Fiber website, but not yet in Virginia. The telco has been interested in carving out a fiber offering since 2022.
The carrier has also supported Tillman Fiber Co's FTTP network expansion in Florida.
KKR noted that the investment in Metronet is being carried out through its global infrastructure strategy. The investment firm currently manages more than $61bn worth of infrastructure assets globally.
“Since our initial investment in Metronet in 2021, the company has grown rapidly, including constructing new fiber infrastructure and adding subscribers in attractive, underserved markets,” said Waldemar Szlezak, partner, and global head of digital infrastructure at KKR.
“Our new joint venture with T-Mobile will be transformational for the future of the Metronet business."
KKR has invested in wholesale fiber optic network companies in Chile, Colombia, Peru, and in the Netherlands, plus Hyperoptic in the UK, Telenor Fiber in Norway, and Deutsche Glasfaser in Germany.
Last month, the company completed the closing of its acquisition of Telecom Italia's network assets, NetCo, in a deal valued at €18.8 billion ($20.1bn), but could be worth as much as €22bn ($23.5bn) with earn-out payments.
