AT&T forms Gigapower wholesale fiber services joint venture with BlackRock Alternatives

AT&T (NYSE:T) and investment firm BlackRock Alternatives, through a fund managed by BlackRock’s Diversified Infrastructure business, say that they have agreed to form a wholesale fiber network services provider called Gigapower LLC that will target markets outside of AT&T’s traditional 21-state wireline footprint. The two companies say they will co-own and “govern” the joint venture but did not reveal the ownership split or how much money each party will commit to the deal. The transaction is subject to customary closing conditions, including regulatory approvals; the parties did not predict when they expect this milestone to be met.

Gigapower – which echoes the U-verse with GigaPower name AT&T gave its gigabit fiber broadband offering in 2013 (see “AT&T to launch 1-Gbps FTTH in Austin”) – will initially focus on deployment of a multi-gigabit commercial open-access fiber network to 1.5 million customer locations across the U.S. The deployment will be in addition to AT&T’s current efforts to pass more than 30 million locations with fiber by the end of 2025. AT&T says its nationwide wireless sales organization will sell fiber to consumers and other business customers in Gigapower territories; Gigapower will own the relationships with ISPs who choose to work with them to deploy their networks, according to an AT&T source.

AT&T plans to be a customer of Gigapower as well as a co-owner – which means that it has found a partner in BlackRock willing to help underwrite its fiber broadband expansion plans. Bloomberg News reported last October that AT&T had hired Morgan Stanley to achieve such a goal (see “Bloomberg: AT&T looking to create FTTH joint venture”). At the time, Bloomberg sources estimated such a partnership could be valued at $10 billion to $15 billion.

“Now more than ever, people are recognizing that connecting changes everything” said John Stankey, CEO of AT&T. “With this joint venture, more customers and communities outside of our traditional service areas will receive the social and economic benefits of the world’s most durable and capable technology to access all the internet has to offer.”

“We are excited to form the Gigapower joint venture in partnership with AT&T, which will be serving as not only a joint owner but also the first wholesale tenant. We believe Gigapower’s fiber infrastructure designed as a commercial open access platform will more efficiently connect communities across the United States with critical broadband services,” said Mark Florian, global head of Diversified Infrastructure, BlackRock. “We look forward to partnering with Gigapower’s highly experienced management team to support the company’s fiber deployment plans and shared infrastructure business model.”

Bill Hogg, president, technology operations at AT&T from August 2016 to January 2018, will be CEO of the joint venture. “Fiber is the lifeblood of digital commerce,” commented Hogg. “We have a proven team of professionals building this scalable, commercial open-access wireline fiber network. Our goal is to help local service providers provide fiber connectivity, create the communications infrastructure needed to power the next generation of services, and bring multi-gig capabilities to help close the gap for those who currently are without multi-gig service.”

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