(Bloomberg) -- AT&T Inc. is in discussions to create a joint venture that would invest billions of dollars on fiber-optic network expansion, according to people familiar with the matter.
The company is working with Morgan Stanley to help bring in an infrastructure partner to the venture, which is expected to be valued at $10 billion to $15 billion, said some of the people, who asked not to be identified because the matter is private.
The discussions with infrastructure investors are early and could still fall apart, the people said. AT&T could find a partner as soon as this year, but it could also slip into 2023, one of the people added.
AT&T and Morgan Stanley declined to comment. TMT Finance reported some of the details in late August.
Dallas-based AT&T is embarking on its biggest plan yet to pursue broadband customers outside its traditional 21-state local phone territory. The largest US telecommunications company by revenue has already started to take on fiber projects in new states such as Arizona and plans to expand to more in an effort to boost subscriber growth. Chief Executive Officer John Stankey has been traveling to cities such as Mesa, Arizona, and Evansville, Indiana, to kick off projects, including public-private partnerships that can serve as a model to tap into the nearly $100 billion in federal broadband funding available.
The rise of digital infrastructure investing has been swift in recent years, with alternative asset managers such as Brookfield Asset Management, KKR & Co. and Blackstone Inc. jockeying for assets.
Large corporations are starting to turn to these deep-pocketed funds to help them build expensive infrastructure projects. Earlier this year, an affiliate of Brookfield partnered with Intel Corp. on a $30 billion joint venture to build semiconductor manufacturing facilities.
AT&T’s decision to move into new markets hinges on at least three factors, Stankey said in an interview in early October. The area has to be undeserved with broadband and be profitable for the company. AT&T also has to be the first provider of fiber to the home.
Stankey is bullish on fiber as a path to long-term growth for AT&T since it provides the some of the largest capacity and highest potential speed of any broadband connection. That gives fiber-optic lines a longer-term viability than copper wire or wireless connections. But the wiring cost are high and require a huge investment in labor and equipment.
As AT&T focuses on fiber, peers Verizon Communications Inc. and T-Mobile US Inc. have been selling wireless home internet as a cheaper alternative to fiber, which has been a source of most, if not all of the industry’s broadband growth this year.
©2022 Bloomberg L.P.
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